The siren's wail at the historic Metropole hotel sent American folk singer Joan Baez and other guests hurrying across a garden and into an underground bunker. Even through five feet of concrete, they could still hear the roar of American bombs raining on parts of Hanoi.

Nearly four decades have passed since the so-called Christmas Bombings rocked parts of Vietnam's capital in December 1972. After the war ended three years later, the bunker was sealed and all but forgotten.

Its exact location remained a mystery until this summer, when a worker's drill pierced its thick concrete roof during renovations of a poolside bar. Since then, workers have been excavating the flooded and low-ceilinged space. Not much has been found in the seven rooms: a wine bottle, a rusty paint can and a light bulb still in a socket. But a few tales remain, some involving famous guests.

"If these walls could talk, they would tell a lot of stories," says hotel general manager Kai Speth. He wants the bomb shelter brought back into the life of the hotel as a reminder of what the hotel and the town went through.

The North Vietnamese government used the French colonial-era hotel, a stately four-storey building in the shadow of Hanoi's opera house, to house foreign guests during the war.

Nguyen Thi Xuan Phuong, now 82, remembers staying in the bunker during the Christmas Bombings with anti-war activist Baez. On one of the 12 nights that B-52s pounded areas around the city, the lights went out, prompting a few foreigners to scream in the darkness.

"Can you sing a song?" Phuong asked the young singer. "We may not change the situation, but your songs may help calm people down." When Baez's voice rang out as someone plucked a guitar, the bunker was revitalised, Phuong recalls.

Others who sheltered there included war correspondents and American actress Jane Fonda, says Phuong, who worked for the government as a doctor assisting foreign guests.

Fonda's visit to enemy territory ignited fury at home. She criticised US policy on North Vietnamese radio and earned the nickname "Hanoi Jane" after posing for a photo atop an anti-aircraft gun, an incident that Fonda later said she regretted. Publicists for Baez and Fonda did not respond to requests for comment.

French entrepreneurs opened the Metropole in 1901, calling it the "largest and best appointed hotel in Indo-China". Over the years, it welcomed celebrities from Charlie Chaplin, who came in 1936 on his honeymoon, to Graham Greene, who wrote parts of his famous novel The Quiet American at the hotel.

The Metropole was renamed the Thong Nhat (Reunification) hotel after Vietnam gained its independence from France in 1954. But after communist forces won the Vietnam war in 1975, the hotel languished under state management as a reunified Vietnam struggled to recover from fighting that killed some 58,000 Americans and an estimated 3 million Vietnamese.

It wasn't until the early 1990s, after a French company assumed partial ownership, that the Metropole regained its earlier name and its place as one of the city's spots to see and be seen.

Today, with Vietnam emerging as one of Asia's fastest growing economies, Hanoi's nouveaux riches roll up in Bentleys and Rolls-Royces and spend $70 per person on Sunday brunch. Upscale boutiques line its green-shuttered white facade, with electric-blue handbags selling at Hermès for $7,000 – nearly seven years' salary for the average Vietnamese. Mick Jagger, Angelina Jolie and Fidel Castro have all spent the night here.

Even those who can't afford the $10 cocktails gravitate toward the city landmark. Every day soon-to-be Vietnamese brides in white silk and lace pose for photos outside its walls.

Discovery of the roughly 500sq ft bunker with its mildewed, mustard-coloured walls raises questions about how it will be preserved and who will be allowed to visit, especially since half of the hotel is indirectly owned by the government.

Prominent Vietnamese historian Duong Trung Quoc says it should be opened to the public. While the bunker primarily protected foreign guests, he says it could play an important role in illuminating Vietnam war history.

But Speth, the general manager, says he doesn't want mobs of tourists turning his five-star hotel into a south-east Asian Grand Central Station.

"I have an obligation to my guests to keep the Metropole luxurious and exclusive," he says. "If I just leave it open, can you imagine? All of the tour guides of Hanoi would take everybody down there."