Located in the middle of Telemark's valley near the historic Telemark Canal, Dalen Hotel was constructed during the reign of Queen Victoria, who sat on the British throne from 1837 to 1901. When the canal opened in 1892, it was the shortest route between the two cities of Oslo (then Christiania) and Bergen. At the time, Norway was an exotic destination that attracted many tourists. Spotting a need for a luxury hotel to accommodate wealthy travelers, Hans Larsen, Lars Red, and Anton Hansen collaborated with renowned architect Haldor Larsen Børve to build the opulent Dalen Hotel, which opened its doors in 1894.

Dalen Hotel fell upon hard times during World War II. The German occupation forces took over the hotel and much of the original interior was damaged, stolen, or lost. The hotel was not maintained after the war and quickly fell into a state of disrepair. The building was thrust back into the spotlight when it was purchased by renowned Norwegian singer and evangelist Aage Samuelsen. Samuelson desired to restore the hotel to its former glory, but he was unable to acquire the necessary funds to do so. However, his endevours were not in vain, since his efforts drew invaluable attention to the hotel.

After his death, there was renewed interest in returning the once-grand property to its regal state, and talks of restoration and preservation began in earnest during the 1980s. After years of disuse, the hotel was finally restored to its original beauty, once again opening its doors to guests in 1992. In 2000, Dalen Hotel was honored with the European Nostra award for its outstanding renovation efforts. Today, guests can expereince the same soul, beauty, and ambiance as their traveling predecessors more than a century ago.