Where to Stay in Madrid, Spain: 4 Best Areas & Hotels

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Planning a trip to Madrid and not sure where to stay? We’ve got you covered!

Madrid is a vibrant, elegant, and endlessly walkable city filled with art, food, nightlife, and charm on every corner. But choosing the right neighborhood can make a big difference in how you experience it all. 

So whether you’re dreaming of sipping vermouth in a sun-soaked plaza, museum-hopping along the Paseo del Prado, or dancing your way through the city’s buzzing bar scene, this guide will help you find the perfect base. Let’s get stuck in!

Where to Stay in Madrid Map

Overview of the Best Areas To Stay in Madrid

Madrid is a super walkable and metro-friendly city, with many of its top neighborhoods sitting just minutes apart on foot or by train. That said, each area has its own personality; some are lively and buzzing, while others offer a quieter, more historic vibe. 

Prices are generally more affordable than in other major European capitals, but if you want to stay in the most central areas, expect to pay a little more.

Here are our favorite neighborhoods to stay in Madrid:

• Malasaña – Trendy, youthful, and packed with fun bars and cafés, Malasaña has a creative energy that’s perfect for nightlife lovers and cool café hoppers. Akeah Hotel Gran Vía offers sleek rooms and a rooftop pool just a few blocks from all the action.
  
• Barrio de las Letras – Historic and full of culture, this central neighborhood is home to literary legends, beautiful architecture, and easy access to museums. Sonder Santa Ana combines style and comfort right in one of the area’s prettiest squares.
  
• La Latina – A charming, tapas-filled corner of Madrid with winding streets and lively plazas, especially fun on weekends. Posada del León de Oro Boutique Hotel is a cozy and authentic spot right in the middle of it all.
  
• Barrio de los Austrias – Elegant, walkable, and quiet in all the right ways, this area surrounds must-see landmarks like Plaza Mayor and the Royal Palace. Petit Palace Arenal is perfectly placed between historic sights and shopping streets.

Where to Stay in Madrid

Malasaña

Malasaña is one of Madrid’s coolest and most vibrant neighborhoods, full of energy, creativity, and seriously good coffee. This is the heart of the city’s countercultural spirit, famously known for fueling the Movida Madrileña movement in the 1980s. These days, it’s a haven for indie boutiques, quirky cocktail bars, vintage shops, and colorful street art, all set along narrow streets that buzz late into the night.

It’s the perfect area for travelers who want to be surrounded by locals, students, and creatives, and who don’t mind a bit of late-night life. You’re also incredibly central here: Gran Vía is just a few blocks away, and you can easily walk to places like Plaza de España, Chueca, and even the Royal Palace.

We’ve always had a soft spot for Malasaña’s playful edge, the cafés feel like someone’s living room, the shops have personality, and you never know what kind of pop-up market or gallery opening you’ll stumble across. It’s not the quietest neighborhood, and hotel prices are starting to climb, but the atmosphere is absolutely worth it if you love being where the city really lives.

Pros

• Creative, youthful vibe with amazing food and nightlife
• Super central and easily walkable to major sights

Cons

• Some parts can be noisy at night, especially near the bars
• Hotel prices are climbing due to growing popularity

Luxury – $$$

If you want jaw-dropping views and a showstopper rooftop, Riu Plaza España delivers in style! Set in a grand 27-story building right on Plaza de España, just steps from the edge of Malasaña, this luxury hotel is one of Madrid’s most iconic stays. It’s bold, polished, and has that “treat yourself” feeling from the moment you walk through the doors.

Rooms are modern and spacious, with huge beds, soundproofing (a big plus in this area!), and windows that look out over the city skyline. But the real star is the 360º rooftop terrace, complete with a sky bar, glass-floored walkway, and panoramic views that will take your breath away.

There’s also a rooftop pool, a big breakfast buffet, and a gym, so everything’s covered whether you’re sightseeing or staying put. Expect rates in the €300–€500 range depending on the season.

Check prices and availability at Booking.com!

Mid-range – $$

Akeah Hotel Gran Vía is a sleek, modern stay right on the edge of Malasaña, perfect if you want to be close to the action but still have a chic place to recharge. The location is spot-on: just a few minutes’ walk from the Gran Vía, and surrounded by cafés, bars, and vintage shops that make this neighborhood so much fun to explore.

Rooms are smart and minimalist, with clean lines, ultra-comfy beds, and blackout curtains. We especially loved the rooftop terrace and pool, small but stylish, with great views and a relaxed vibe that feels like a little urban oasis. There’s also an in-house restaurant and bar if you don’t feel like venturing far for your first coffee or last cocktail.

It’s a fantastic option for couples, friends, or solo travelers who want great value without sacrificing design or comfort. Prices usually fall between €140–€270 per night.

Check all room categories and book your stay here!

Budget – $

Hostal Meyra is a compact and charming stay right in the heart of Malasaña, ideal for travelers who want to be close to the action without splurging on a big-name hotel. Tucked onto a quiet side street just off Gran Vía, this little guesthouse puts you within walking distance of Madrid’s trendiest cafés, nightlife, and boutique shops, all while keeping the price surprisingly reasonable.

Rooms are simple but cheerful, with modern finishes, comfy beds, and bright pops of color. One of the things we love is how clean and thoughtfully arranged everything feels, it’s budget-friendly without feeling bare-bones. Some rooms even have balconies, which is a fun perk if you enjoy a little fresh air or street views.

It’s a great pick for solo travelers, couples, or anyone who just wants a central, cozy place to sleep after a full day of exploring the city. Prices typically range from €70–€150 per night.

Check availability and book your stay here!

Barrio de las Letras

Barrio de las Letras is where Madrid’s literary soul comes alive! Once home to iconic writers like Cervantes and Lope de Vega, this historic district is now one of the most atmospheric and walkable places to stay in the city. The streets are lined with quotes from poets and playwrights, and the elegant buildings whisper centuries of stories, yet it still feels lively, thanks to its cafés, wine bars, and charming boutiques.

This neighborhood is perfect for travelers who want to soak up culture and history without sacrificing location. You’re right between Sol and the Paseo del Prado, which means world-famous museums like the Prado, Reina Sofía, and Thyssen-Bornemisza are all just minutes away on foot. It’s also central enough to walk to Retiro Park, Gran Vía, or even La Latina.

Barrio de las Letras isn’t as edgy or nightlife-heavy as places like Malasaña or Chueca, and the cobbled streets can get a bit crowded during the day. But for art lovers, foodies, and romantics, this area is pure magic, especially when golden hour hits the balconies and everything feels like a scene from a novel.

Pros

• Beautifully historic and full of literary charm
• Walking distance to major museums, parks, and central neighborhoods

Cons

• Can get busy during peak hours, especially around the tourist squares
• Not as lively at night compared to trendier areas like Malasaña

Luxury – $$$

Vincci Soho is a stylish boutique hotel that fits right into the artistic, historic heart of Barrio de las Letras. Spread across five restored heritage buildings, this hotel feels like a contemporary hideaway tucked into a neighborhood that still echoes with centuries of literary history. 

The rooms are spacious and elegant, with sleek wood floors, luxe bedding, and large windows that bring in natural light. Some rooms even feature private terraces, which is a rare treat in this part of the city! There’s also a peaceful courtyard garden and a trendy restaurant and bar downstairs, perfect for a glass of wine after a day of museum-hopping or wandering the cobbled streets.

The location couldn’t be better if you want culture at your doorstep: the Prado, Thyssen, Reina Sofía, and Retiro Park are all within easy walking distance. Prices generally range from €180–€400 per night.

Book your stay at Vincci Soho here!

Mid-range – $$

Sonder Santa Ana hits that sweet spot between comfort, style, and location, and honestly, it’s hard to imagine a better base for exploring Madrid’s literary quarter. Sitting right on Plaza de Santa Ana, one of the neighborhood’s most beautiful and lively squares, the hotel gives you that classic Madrid view the second you step outside. And inside? Clean, modern design that feels like stepping into your own little city apartment.

Rooms are bright, thoughtfully decorated, and super functional, with big windows, cozy sitting areas, and extras like a Nespresso machine and fast Wi-Fi. One thing we really appreciate is how quiet and calm it feels, even though you’re just steps from all the action, tapas spots, theaters, museums, you name it. It’s perfect for travelers who want to feel central without being in a touristy rush.

And because this is a digital-style hotel (no front desk, no fuss), you’ve got total flexibility to come and go on your own terms. Rates usually land in the €90–€200 range.

Check availability and book your stay here!

Budget – $

For budget travelers who want to stay somewhere fun, friendly, and super central, room00 Ventura Hostel is our top choice! It’s right in the heart of Barrio de las Letras, tucked down a charming side street just a few steps from Plaza Santa Ana. Whether you’re heading to the Prado, hopping between tapas bars, or catching a flamenco show, everything is right outside your door.

The hostel itself is bright and modern with a stylish edge, think whitewashed walls, clean lines, and pops of color. You’ll find both private rooms and shared dorms, all with en-suite bathrooms (huge plus!). One of the things we love is the on-site bar and lounge area, which makes it easy to meet other travelers or just unwind with a drink after a full day out.

This is a great option for solo travelers, digital nomads, or anyone who wants to stay central without spending a fortune. Prices typically range from €75–€130 per night.

Book your budget-friendly stay here!

La Latina

One of Madrid’s oldest and most charming neighborhoods, La Latina is absolutely packed with character! This is the land of winding medieval streets, sun-drenched plazas, and some of the city’s best tapas bars (seriously, the food here is on another level). It’s a little more relaxed during the week, then comes alive on weekends when locals spill out into the streets for drinks, laughter, and late-night conversations.

It’s the perfect place to stay if you’re into lively plazas, a strong local vibe, and being surrounded by great eats at every turn. You’re within walking distance of major sights like the Royal Palace, the Prince of Anglona Garden, Plaza Mayor, and El Rastro, Madrid’s legendary flea market that pops up every Sunday. We love how it still feels authentically Spanish, even though it’s just minutes from the tourist trail.

That said, accommodation here is a little more limited, and the nightlife buzz can get a bit noisy depending on where you stay. But if you want a neighborhood with personality, history, and the best jamón ibérico of your life, this is the place to be.

Pros

• Fantastic tapas scene and cozy, local vibe
• Walking distance to historic sights and lively markets

Cons

• Fewer hotel options compared to more central neighborhoods
• Can be noisy, especially on weekends and late evenings

Luxury – $$$

L&H La Latina Selection is a sleek and stylish boutique stay right in the heart of one of Madrid’s most authentic neighborhoods. It feels more like a chic city apartment than a traditional hotel, and we love how it blends crisp, modern design with the laid-back vibe that makes La Latina so special.

The rooms are bright, airy, and beautifully designed, with wood accents, minimalist decor, and little kitchenettes that are perfect if you like to prep a quick breakfast before heading out. Some even come with balconies or extra space to stretch out, which is a real bonus in this compact part of the city. And the location? You’re just a short walk from tapas heaven on Calle Cava Baja, plus El Rastro, Plaza Mayor, and the Royal Palace are all close by.

It’s ideal for couples, long-weekenders, or anyone who wants a luxury stay that feels calm, contemporary, and connected to local life. Prices generally range from €150–€360 per night.

Check prices and availability at Booking.com!

Mid-range – $$

Posada del León de Oro is one of those places that feels like a little secret, a boutique gem tucked along Calle Cava Baja, Madrid’s most famous tapas street. Set in a beautifully restored 19th-century building, this hotel perfectly captures the essence of La Latina: lively, local, and full of character.

Inside, you’ll find modern rooms with warm, rustic touches, exposed beams, soft lighting, and a few playful design details that make the space feel thoughtful but never overdone. One of the standout features we love is the glass floor in the in-house restaurant, where you can see remnants of the old city walls beneath your feet.

It’s ideal for travelers who want charm, comfort, and unbeatable access to the best food in the city, all at a mid-range price point. Rates typically range from €140–€220 per night.

Check availability and book your stay here!

Budget – $

Right on the edge of La Latina, AbraCadabra Suites is an affordable pick that’s perfect for travelers who want a central base with a bit of personality. It’s set inside a classic Madrid-style building, just a few minutes’ walk from Plaza Mayor, Mercado de San Miguel, and all the lively tapas bars along Calle Cava Baja.

Rooms are colorful and cheerful, with a mix of quirky artwork, hardwood floors, and little balconies overlooking the street. One thing we love is how close you are to everything without feeling caught in the middle of the crowds.

It’s a great fit for budget-conscious travelers who want something a little more fun than your standard guesthouse. Rates usually run between €75–€150 per night.

Check prices and availability here!

Barrio de los Austrias

Barrio de los Austrias is one of Madrid’s most historic and regal neighborhoods, where grand plazas, centuries-old architecture, and quiet side streets create a timeless, elegant vibe. This area is home to some of the city’s most iconic landmarks, including the Royal Palace, Almudena Cathedral, Plaza Mayor, and Plaza de la Villa. It’s ideal for travelers who want to stay close to the cultural heart of Madrid while enjoying a more tranquil atmosphere.

The streets here are wider and quieter than in nearby neighborhoods like Malasaña or La Latina, making it a great option for couples or families looking for a more relaxed base. You’ll still be able to walk just about everywhere. Sol, Gran Vía, and the Opera district are all within easy reach. And there’s no shortage of beautiful architecture: marble columns, iron balconies, and stunning facades at every turn.

That said, this isn’t the place for buzzing nightlife or edgy cafés. It leans more traditional and doesn’t have quite the same number of hotel options, especially for budget travelers. But for history lovers and those after a slower pace, it’s an excellent place to stay.

Pros

• Surrounded by major landmarks like the Royal Palace and Plaza Mayor
• Quiet, elegant vibe with easy access to central Madrid on foot

Cons

• Fewer bars and nightlife spots compared to trendier neighborhoods
• Limited accommodation choices, especially for budget stays

Luxury – $$$

Ocean Drive Madrid is a sleek, design-forward hotel that brings a cool, contemporary vibe to the historic heart of the city. Just steps from Plaza de España and Gran Vía, this hotel makes it easy to explore the landmarks of Barrio de los Austrias while still feeling plugged into the creative energy of modern Madrid.

Rooms are bright, spacious, and beautifully styled, think warm wood tones, terrazzo floors, and crisp linens with just the right amount of personality. One of the standout features we love is the rooftop terrace and splash pool, which offers a laid-back spot to unwind with skyline views after a day of sightseeing. 

There’s also a trendy in-house restaurant and plenty of cozy lounge space if you’re not quite ready to call it a night. It’s a great fit for travelers who want a bit of design flair with their royal-palace-adjacent location. Expect rates to fall between €200–€400 per night.

Check availability and book your stay at Booking.com!

Mid-range – $$

Tucked along a quiet pedestrian street between Opera and Sol, this cozy boutique stay puts you right in the middle of historic Madrid without feeling overwhelmed by the crowds. Petit Palace Arenal is just a short stroll from Plaza Mayor and the Royal Palace, making it a fantastic base for exploring the city’s classic sights.

Inside, the rooms are modern and practical, with comfy beds, rainfall showers, and a pop of cheerful design that gives the space some personality. We love that they offer free bikes, plus a generous breakfast spread if you want to fuel up before a day of wandering. The building itself has that old-Madrid charm, but everything inside feels fresh and updated.

It’s a great fit for travelers who want convenience, comfort, and a central location, without the high-end price tag. Rates usually range from €180–€270 per night.

Check availability and book your stay here!

Budget – $

Hostal Las Fuentes proves that staying in a prime location doesn’t have to come with a premium price tag. Just around the corner from the Royal Palace and Teatro Real, this no-frills guesthouse is ideal if you want to be steps from Madrid’s biggest sights without splurging on a boutique stay.

Rooms are clean and simple, with comfortable beds, private bathrooms, and all the basics you need for a short and sweet city break. Some even have little balconies overlooking the street, a lovely touch if you enjoy people-watching or sipping coffee with a view. One thing we really appreciate here is the sense of quiet, despite the central location, it feels tucked away from the rush.

It’s a great match for budget-minded travelers who want charm, convenience, and comfort without the extras. Rates typically range from €70–€140 per night.

Check prices and availability here!

Other Activities to do While in Madrid

Now that you’ve figured out where to stay, it’s time to start planning what to do next. Madrid makes it easy to fill your days and nights with unforgettable experiences. From historic walks to flamenco shows, ghost stories to wine tastings, there’s something here for everyone. These are a few of our favorite things to do in Madrid, and we think you’ll love them just as much as we did.

• Explore Madrid’s historic heart – This walking tour was the best intro to the city! We wandered through Puerta del Sol, Plaza Mayor, and past the Royal Palace while learning all kinds of fascinating history. Our guide was super engaging and shared fun stories we wouldn’t have discovered otherwise.

• Eat and sip your way through Madrid – Tasting our way through Madrid on this tapas and wine tour was such a fun night. We visited cozy, local bars around the Literary Quarter, tasting everything from Iberian ham to chickpea stew. Plus, the wines were amazing!

• Explore the city’s darker side – Spooky legends, eerie crimes, and ghost stories filled this night walk through Madrid’s shadowy past. We wandered down dim alleyways, learned about the Inquisition, and heard chilling tales of hauntings and true crimes. It was creepy, fascinating, and surprisingly fun—the perfect spooky evening activity!

• See a flamenco show – Surrounded by just three rows of seats, we were practically part of the stage at this flamenco show. The dancing was intense, the music raw and emotional, and the whole experience felt incredibly intimate. It was pure flamenco at its finest, and we loved every second.

• See three cities in one day – Castles, cathedrals, and centuries-old city walls made this day trip from Madrid unforgettable. We explored the fairytale Alcázar of Segovia, stood beneath a Roman aqueduct, and wandered the medieval streets of Ávila. It was a full day of history, views, and seriously wow-worthy architecture.

Renting a Car in Spain

Renting a car in Spain is the perfect way to explore beyond the cities—think small villages, coastal towns, and hidden gems impossible to reach by public transit! The roads are well-maintained, and driving here is generally pretty relaxed, making it ideal for a road trip.

We always use Discover Cars to book our rentals and can’t recommend them enough. It’s super easy to compare prices, find automatic cars (which can be tricky in Europe!), and add affordable full coverage insurance. If you want a full breakdown, check out our Discover Cars review here.

Tips for Renting a Car in Spain

• Drive on the right: Like most of Europe, you’ll be driving on the right-hand side in Spain. And make sure you stick to the speed limit, speed cameras are common here!
• Pick the right car: Some of Spain’s smaller towns and villages have narrow streets and tight parking, so I recommend going for a compact car. Also, most rentals here are manual, so if you need an automatic (like me!), be sure to filter for it on Discover Cars when booking.
• Insurance is a must: I always add full coverage insurance, whether it’s a ding in a parking lot or a chipped windshield on a rural road, having full protection gives you peace of mind. Plus, it’s super affordable with Discover Cars!
• Toll roads: Spain has both toll and toll-free roads. Toll roads are usually marked with “AP” and can be paid using cash, credit card, or electronic devices like VIA-T. Plan your route accordingly and have a payment method ready.
• Parking tips: In urban areas, parking can be challenging. Look for designated parking zones and be aware of local regulations to avoid fines. Some areas may have restricted parking zones or require a resident permit.

What You Need to Rent a Car in Spain

• A valid driver’s license from your home country.
• If you’re from outside the EU, you’ll likely need an International Driving Permit (IDP).
• A credit card in the driver’s name is typically required for the security deposit.
• Most rental companies require drivers to be at least 21 years old, with a young driver surcharge applicable for those under 25. Some companies may have higher age requirements, so make sure you double-check.

Ready to hit the road? Book your car with Discover Cars here and discover the freedom of exploring Spain on your own terms!

Thanks for reading!

With all the walking, dining, and sightseeing you’ll be doing in Madrid, having the right place to come back to is key. Whether you’re looking for a stylish boutique hotel, a central guesthouse, or a stay with a rooftop and a view, these neighborhoods offer a great base for your adventure.

Before you head off, don’t forget to browse our other Spain travel blogs here to help round out your itinerary. Here are a few more guides we think you’ll enjoy:

10 Awesome Things To Do In Madrid, Spain

How to Spend THREE DAYS in Madrid: 3-Day Itinerary

10 Best Things to do in Valencia, Spain

10 Best Things to do in Seville, Spain