The Gaudiello Hotel has been one of San Donato's historic businesses. The earliest documented traces date back to 1901. The Albergo consisted of seven rooms and an adjoining apartment, with a total of thirty beds. The entrance was on Piazza Municipio, while the rooms faced the second floor, on Via Orologio, opposite the Old Town Hall. Opposite the Albergo were the family's other businesses: a "Spaccio di Vino," the textile and yarn store, and the bakery.

In the 1920s the Albergo was run by Anna Cautilli, wife of Domenico Gaudiello. In August 1940, with the arrival in San Donato of the first foreign female internees, the facility housed a number of Jewish ladies: Grete Bloch, Kafka's friend and confidante; Grete Berger, international silent film actress; performer in the great films of German Expressionism; Klara Babad, owner of a publishing house in Czechoslovakia.

In the summer of 1942 some actresses from the film Carmen and Arturo Ambrosio, the production director. The film was an important French-Italian cinematic work, made with the aid of large means, set designs and the use of military cavalry. Due to the armistice of September 8, 1943, the film was blocked by the Germans. When the war was over, in 1945, it was released in Europe and the United States gaining a major audience and critical acclaim.

Following the armistice of September 8, 1943, San Donato and the Comino Valley were militarized and occupied by German troops as the rear of the Cassino front. The second floor of the Gaudiello Hotel (the floor with the balcony) was requisitioned, becoming an office whose location allowed control of the activities carried out in the Town Hall. During the roundup of Jews on April 6, 1944, Grete Berger and Klara Babad were arrested inside the facility.

The 'hotel housed tourists heading to Forca d'Acero, traveling salesmen, hunters, people passing through and students on a field trip. Among them were students from Tulliano High School in Arpino, on a trip to San Donato to practice skiing and hiking. The arrest of the Jewish internees grieved the owner so much that she closed the business forever shortly thereafter.