In the 1930s, Argentina's Lake District attracted the smart set, only to fall on hard times. Mark Jolly traces a region's rebirth through luxury lodges and eco-adventure

Llao Llao. So nice they named it twice. In fact, they built it twice. Argentina's most celebrated hotel, first constructed in 1938, was a monument to the natural world, encased inside and out with Patagonian cypress logs and roofed with alerce wood shingle. Perched on a knoll, flanked by the foothills of the Andean cordillera and floating above Lake Moreno, Llao Llao was a hit: a bold, iconic diamond on the virgin landscape, which had been freshly minted as Nahuel Huapi National Park. Aided by a new rail link to the capital, Llao Llao opened up the area as a glam magnet for high rollers from Buenos Aires and beyond. But a year later, it burned to its foundation. Immediately, the undaunted architect set about re-creating the original structure, this time with a concrete facade replacing the timber. And the dream of luring travelers back to the gateway of the Great South was reborn.

In the ensuing six decades, Llao Llao (pronounced zshao zshao)—from the Mapuche Indian for "sweet sweet," referring to an edible honeyed fungus found on the native coihue trees—has been reinvented several times over. As has the town that it helped fashion, San Carlos de Bariloche. Dubbed the Switzerland of South America, Bariloche, as it is always called, occupies a singular place in the Argentinian imagination. For several generations, it has been populated by a continuous stream of settlers from Central Europe. From the seething capital to the flatlands of the pampas, the very name Bariloche invokes a fairy world of gingerbread cottages, handmade-chocolate shops, immense alpine vistas, lush ancient forests, and pure glacial lakes. And to a large part, this perception is the reality.

"In the Austrian Alps you'll find this wonderful lake that meets a mountain, but then you'll look around and every fifty feet you'll see a fence and a little house," says half-Austrian, half-French Emmanuel Burgio, founder of Blue Parallel, an agency specializing in South America travel. "In Argentina, it's all wild, open space."

Thanks largely to the financial crisis that four years ago shattered the economy of South America's most expensive nation and transformed it into a garage sale overnight, Bariloche has retooled itself into a top-flight destination. While hotel rates have started to creep north again and the five-star market has kept close parity with international tariffs, eating out—and eating well—are still a steal here. Bariloche's fearsomely First World infrastructure gives it an edge over its Latin neighbors. Moreover, the surrounding Lake District, where the provinces of Neuquén and Rio Negro kiss the Chilean border, straddles three distinct climate zones and flaunts four full seasons of outdoor fun. No wonder a new wave of boutique properties, rebuilt historic lodges, and fresh-footed outfitters is ushering back Argentines and enticing outsiders to the ultimate lake and mountain resort in the Southern Cone, the nickname for the continent's southernmost countries.