When James Hilton's novel Lost Horizon hit bookstores in 1933, hordes of adventurers went searching the Himalayas for the mythical paradise he imagined. Sixty-eight years later, the supposed setting for Hilton's book was officially renamed Shangri-La to entice a new generation of tourists. Today the northern Yunnanese county (formerly called Zhongdian) hosts a thriving mixture of ethnicities; Tibetan culture, most agree, is more vibrant and authentic here than in Communist-occupied Tibet. A creative set has fled the urban grind of Beijing and Shanghai and is transforming traditional mud-brick houses into galleries, inns, and cafés. Now you can take yak butter tea next to Chinese artists and saffron-robed monks at the Treehouse (86-887/823-1296), in the main town of Zhongdian, and then use the café's Wi-Fi to check your e-mail. Or grab a martini nearby at the bohemian bar Raven (86-887/828-9239). Cropping up along flower-fringed paths to hilltop monasteries is also a new class of hotels. Book a room at the year-old Banyan Tree Ringha (www.banyantree.com), a 32-room converted-farmhouse hotel and spa; the rustic Gyalthang Dzong Hotel (www.coloursofangsana.com), where all 47 rooms face an interior courtyard; or the Songtsam Hotel (www.songtsam.com), which showcases the work of local coppersmiths and rug makers. Then watch the mist envelop the legendary craggy peaks.
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