If you're uncomfortable staying there you could try Gran Hotel Velazquez near the Hostal Don Diego. It's a four-star hotel and accepts the coupons Bancotel (see other posts if you haven't heard of them). It's a bit more pricy than Don Diego but perhaps you'd like to check it out. They have some blackout dates for March (1st, 2nd, 6th, 9th, and 16th). With the "coupons" the price is 2 coupons per night at 46 euros each plus tax (so 92 euros/night + 7% tax).