As far as I know there's only one
Hostal Dulcinea - or at least there's only one with a website.
And, as you might already know from postings here, Hostal Dulcinea is highly rated and highly recommended by many people - including me. It's located in the Huertas neighborhood (my favorite of all Madrid), near the Prado Museum, but it's not a 5-star hotel as you mention above. This is a "hostal" and not a hotel at all.
He was talking about "Barrio Latina" which isn't a BAD neighborhood but not the best one either. I don't think I'd label this neighborhood as "scary" though. Some people are just overly cautious.
I don't believe Hostal Dulcinea has an elevator so keep this in mind when considering the 70-year old grandmother. The rooms are simple, sparse, and typically small but comfortable and clean.
Enjoy your time in Madrid and Spain!
Saludos, MadridMan
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