We enjoyed the Hotel Palacio. The location cannot be beat, as it's less than a half-block off the main shopping street, El Conde, and only a short walk from restaurants, the park and Cathedral. The arched doors, shaded patios and architectural details of the old house are quite charming, and our room was comfortably large. The modern bath was huge and sparkling, with a double sink and granite countertops. Personnel were polite and tried to be helpful; only a couple of them spoke any English. Our first-floor room was dark ... it needed more lights. Unlike a previous reviewer, we loved being right off the courtyard and spent several pleasant hours there, eating breakfast, having coffee or reading. The high window onto the courtyard provided (a little) light but did not expose us to "peepers." It felt quite private and quiet.
Part of the hotel is under reconstruction.