A portrait of the president greets you at reception, the managers espouse socialism, the guests wear red T-shirts and the decor promotes Latin American solidarity: welcome to Hotel Chávez.

What used to be the Caracas Hilton today soars over Venezuela's capital as a bold symbol of Hugo Chávez's leftist revolution, a 36-storey, state-run declaration of intent.

The government took it over from the US hotel chain two years ago as part of a sweep towards greater state economic control. Renamed Alba – "dawn" in Spanish and also the acronym of Chávez's regional grouping, the Bolivarian Alliance for the Americas – the hotel hosts summits which condemn US imperialism and chart a brighter, leftist future.

"We are the first socialist hotel but hopefully not the last," said Katiuska Camaripano, its general manager.

Last week it acquired a sister: the government seized the Hilton on Margarita island, Venezuela's tourist playground. It had angered Chávez during a meeting of African leaders he hosted at the hotel. "The owners tried to impose conditions on the revolutionary government. No way. So I said, 'Let's expropriate it.' And now it's been expropriated."

A presidential decree transferred its assets, including 280 rooms, 210 suites, shops, restaurants and a casino to the tourism ministry. A Hilton spokeswoman said the chain was "evaluating" the government's action.

The state's Margarita acquisition may also be renamed Alba, consolidating the brand name. Venezuela has also partly funded a small Alba hotel in Managua, capital of its leftist ally Nicaragua, said Camaripano. "It would be wonderful if we became part of a socialist chain."

Two years after it became a political as well as geographic landmark, the Caracas Alba draws mixed reviews. Managers say it blends socialist values with business savvy and top-notch service. Critics say it is a dump in which nothing works.

There are some striking changes. Gone are the American and European managers and well-heeled foreign guests who used to snap up jewellery and cosmetics in the shops. Red-clad government officials and Cuban delegations have largely taken their place. "Business is dead. All we'll sell is chewing gum and antibiotics," lamented one store owner.

The Italian restaurant now serves more Caribbean fare such as chicken in coconut sauce and cachapa, a corn-based pancake. The gift shop offers a range of ceramic Chávez mugs and sculptures ranging from $20 to $240.

The bookshop which sold glossy magazines and Dan Brown novels has been replaced by a culture ministry outlet offering political tracts such as Transition Towards Socialism and Venezuela: a Revolution Sui Generis.

The titles are all subsidised, with some costing the equivalent of just 50p. "The problem is people buy the books and sell them on for profit," said Nicola Castilla, the bookshop clerk. "It's not easy instilling a socialist conscience."

Top floors offer superb views of downtown Caracas, the Ávila mountain and hillside slums, but the hotel's surrounding district, a hub of theatres and museums, has become dilapidated and crime-ridden. Many middle-class Venezuelans who used to visit now go only when participating in opposition marches. As they pass the Alba they chant "out", apparently directed at the Cubans.

Managers say the 400 staff – who were retained from the Hilton era – reflect socialist values by doing voluntary work such as rubbish collection on their days off. The hotel says it does its bit by giving staff generous benefits not stipulated in their contracts, such as paying for babysitters, and by hosting poor children and hospital patients.

A basic room costs $286 a night but discounts are offered to the needy, said Rayneth Oleaga, a spokesman for the government agency that administers the hotel. "It is for the people. It is accessible to all."

The hotel has 900 rooms, but under Hilton management only 545 were in service, a number the Alba has increased to 782. Last year's 90% occupancy rate owed much to government delegations, said Camaripano. Occupancy this year has fallen to 65% but the hotel still makes a profit. "We are getting a lot of ordinary tourists as well as official delegations."

Travel agents dispute that. Venezuela's capital has a shortage of hotel rooms but foreign tourists often refuse to stay in the Alba, citing bad service, credit card rip-offs, musty smells, tatty furniture and overpriced food.

Online reviews have dwindled but the few that are posted tend to be scathing. "I would never under any circumstances go back there, even if it were free," said one former guest on tripadviser.com.

"It reminded me of hotels behind the iron curtain in the 60s, very depressing. I was glad to leave."

• This article was amended on 27 October 2009. The original referred to a grouping by its previous name, the Bolivarian Alternative for the Americas. This has been corrected.

State of play



Venezuela's government has accelerated its rate of nationalisations and expropriations but tends to pay fair compensation to business owners. Takeovers include:

• A majority stake in four oil projects operating in the Orinoco river basin worth an estimated $30bn.

• A gas injection project belonging to Williams Companies and a range of assets from local energy-related service companies.

• A eucalyptus tree farm owned by Ireland's Smurfit Kappa.

• An Argentine-owned steel mill and Mexican cement company.

• Assets of the US-based AES Corp which was Venezuela's largest private power producer.

• Hundreds of large farms, including the UK-owned Vestey cattle ranch.