Where jet set and refugees rubbed shoulders. Lisbon's Ritz has weathered the ups and downs of Portuguese politics

This is a story of the revolution and the Ritz. The revolution is Portugal's 1974 takeover by left-wing military officers who overthrew a right-wing dictatorship. The Ritz is Lisbon's fanciest, most elegant hotel.

Put the two together and the result is an illustration of Portugal's dramatic difficulties a decade ago and its present emergence as a stable, recovering democracy.

``Right now, we're in quite good shape,'' says smiling manager Jos'e Vega Encarnacao, ticking off a set of impressive occupancy and profitability statistics. ``A decade ago, let's just say things looked bleak.''

After the military takeover, the new government named a ``worker's representative'' to watch over the hotel's management. He didn't care that the hotel had been built with 15 tons of precious marble. Or that in the 1960s, it ranked as one of the world's top-10 such establishments. He and his worker's committee had different ideas - like establishing a ``popular'' restaurant in the fancy Grill.

``It didn't exactly fit with the Ritz image,'' Mr. Vega recalls. ``It failed.''

Problems soon mounted. When Portugal gave independence to its African colonies of Angola and Mozambique in 1975, some 800,000 colonists fled back to their homeland, and the government requisitioned hotels to help house them. It even requisitioned rooms at the Ritz.

``We arrived at the airport in Lisbon with nowhere to go and they sent us right to the Ritz,'' recalls Jos'e Franklin Soares, a refugee from An gola. ``We thought we'd only be able to spend a few days there. We ended up staying nine months.''

During those months, the hotel fell into near-chaos. Refugees lived in one half of the rooms, the jet-set clientele in another. The refugees hung laundry out of the windows. Some even tried to cook in their rooms. Meanwhile, the French hotel cook fled back home where haute cuisine still was appreciated.

In 1977, the refugees finally left the hotel and the country's political situation began to stabilize. Socialist leader Mar'io Soares, blocking a communist takeover, came to power.

Slowly, the hotel recovered. In 1979, the government-appointed worker's representative was retired, the hotel was given back to its rich Portuguese owners, and the prestigious Inter-Continental Hotel chain took over management. Since then, the Ritz has embarked on a $7 million renovation plan.

The future now looks bright. Portugal joined the Common Market last year, the local economy is booming, and elections this month gave conservative Prime Minister Anibal Cavaco Silva the chance to form a stable, strong government - the first time since the revolution that one party has gained a clear parliamentary majority.

``We're like all the other European democracies,'' Vega said. ``Common Market membership and Dr. Cavaco Silva's election is good for Portugal.''

It also is good for the Ritz. More free-spending businessmen are traveling to Lisbon. So too are free-spending American tourists, many of whom stayed away last year because of fears of terrorism.

Competition is increasing for the growing luxury market. A shiny new Meridian Hotel opened next door in 1984, and other new five-star hotel projects, including one for a Hilton, are being discussed. The owners of the Ritz are thinking of further improvements, including construction of a swimming pool, a gym, and a conference center.

No one seems to mind the return to privilege which the Ritz represents. Even Jos'e Franklin Soares, who lived free of charge, prefers to come as a paying customer. Now a successful lawyer, he said, ``The Ritz is much nicer these days.''

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