Creative Commons licensePhoto by flickr user wilvo

Most Madrilenos will tell you that prices have risen fairly steeply since the euro came to Spain's capital, where cans of beer and tapas in noisy, sociable bars by night is tempered by three of the world's best art galleries by day. But compared with other European hubs, Madrid hotel prices will leave your wallet fat and your smile wide. Even luxury options represent good value for money. The compact centre has hundreds of possibilities, from five-star magnificence to simple, clean guesthouses called hostales (or pensiones), tucked away in narrow streets lined with balconies and anonymous laundry. Savvy surfers can find slashed prices by booking over the internet, even in summer when the streets throng with excitable students and Americans peering at maps. Apart from the suitably exceptional Puerta de America, we have deliberately chosen the best hotels in central locations so that you are within an olive stone's throw of attractions like the Prado, the Reina Sofia, the Thyssen, the Gran Via and the leafy escapism of the Retiro. And if you do adjust to the pace of this late-night collision of history and cutting edge, it's a brief stagger home in the (not so) small hours. The order by which the hotels are listed bears no reflection on our preference.

Written by Marcus Waring