Since 1872 this house has stood here in the Schmiedestraße 36, used as a theater with hotel business. The owner was the musician and dance master Jens Petersen. At the end of the 19th century, the building was demolished and a new building was built on the basic structure. It is still the "Hotel Stadt Kappeln GmbH." From 1914 to 1918, the theater was  the district of a state storm battalion. It was followed by Georg Carstens and Wilhelm Lassen as new owners, and Hans and Emma Schade leased the theater from 1928 and were given permission to film screenings, thus creating a cinema in the hall that screened silent films and then sound films.

During the Second World War, the gastronomic business came to a standstill and the house became home to many refugees, especially Estonians and Latvians. Emma Schade helped them wherever she could. Her husband Hans was drafted and landed in the course of the war in an American prisoner of war camp in the Heide. The hotel was taken over from officers of the German army.

In May 1945, the English occupied the Hotel Stadt Kappeln and the Schade family was expelled. A year later, after the withdrawal of the English troops, the house was completely destroyed. The Schade family received compensation of 10,000 Reichsmark and the hotel was again handed over to its owner Wilhelm Lassen. In January 1946, then as a tenant, the family Schade again took over the house and after the currency reform in 1948, it was a budding buisness again.

In 1952 the cinema was rebuilt and modernized.

Hans Schade died in 1957 and Emma gave up the buisness in 1964 after 30 years of working it.

After that the couple Irmgard and Helmut Witt took over the destiny of the traditional inn and hotel. The house and the hall used as a cinema were renovated from scratch and was renamed to "Deutsches Haus" after being renovated. The family Witt ran the business untill 1972. Then the tenant Saamüller ran it until  Renate Wüstenhagen bought the house and ran it until April 1990.

The centenary building was bought by the Kappeln renovation agency BIG-Städtebau and redeveloped to lease it to a new tenant. In 1991, the trained chef and waiter Achim Meyer  took over as the tenant of the now renamed "Hotel Stadt Kappeln" and ran it so that it gradually became a social center in Kappeln again. In 1999, Achim Meyer bought the Hotel Stadt Kappeln and operated it until it was resold in December 2005.