(FORTUNE Magazine) – Katharine Hepburn somersaulted into the pool here; Marilyn Monroe romanced Yves Montand here; Howard Hughes, sitting naked under a light bulb, signed away ownership of TWA here; Neil Simon brought a cluster of stars here (to film California Suite); and Ivan Boesky--a microphone taped to his chest--lured Michael Milken to a suite here and recorded him for the FBI.

There are few pieces of American turf as storied as the 12 acres, 21 bungalows, and 203 rooms of the Beverly Hills Hotel. It's hard to imagine that just a decade ago the place was on its last legs, as Hollywood's elite--tired of the tiny bathrooms and shag carpeting--began to flee to the Peninsula, the Four Seasons, the Regent Beverly Wilshire, and other rival spots. Then, in 1987, the Sultan of Brunei paid a reported $176 million for the property, and the hotel was gutted and renovated to the tune of $100 million. Since the reopening in the summer of 1995, some have wondered whether the Beverly Hills could ever reclaim its place; indeed, some of the buzz remains skeptical even now.

But this year there have been signs that the Pink Palace is back: Occupancy and profits are up, and the hotel has won a new five-star rating from the Mobil Travel Guide. With celebrities and industry bigwigs old and new booking rooms and holding events, the Beverly Hills looks like a West Coast power destination once more. It hasn't been easy. Classic spaces like the Polo Lounge and the Fountain Coffee Shop had to be rebuilt; new dining and function rooms were added--yet the new hotel still had to look and feel like the original. "People were gushing, 'Oooh, they haven't changed a thing,' " recalls Michael Bedner, president of Hirsch Bedner Associates, which created the plush, curving interiors. "But they were walking down corridors that never existed before. Obviously we had successfully set the stage for whatever it was they thought they remembered."

What's really different these days is the stars, who often insist on anonymity: They're whisked through secret passageways under code names. No wonder the hotel had other ideas when FORTUNE's Ken Schles showed up, intending to get behind the scenes. A staffer preceded him everywhere, requesting permission from every guest in every shot. When Schles complained that he'd had more freedom aboard a nuclear aircraft carrier, the management just smiled.

Schles and the hotel brass parted worthy opponents, however. He got the shots he wanted; they successfully hid a lot of big celebrities, rumored to include Sean Connery and Ron Perelman. "I know you were just doing your job," Schles remarked to one of his escorts as they parted. "But I want you to know you were a real pain."

"Thank you," the gentleman replied with a smile. "And I want you to know that what you've done here, over the past few weeks, will never be permitted again." If California Suite is ever reprised, there's a scene to remember.