I stayed at the Hotel America, inside the Alhambra grounds next to the Parador. It was a wonderful stay. The hotel, despite being a small one, has a ton of charm/character and great service and breakfast. The patio/garden is worht the price alone, never the location. As for Granada, I found it quite enjoyable and safe (as compared to Madrid where I almost got mugged in broad daylight right outside the Prado museum). Beware of the gypsy ladies outside the cathedral!!NOthing if not persistent!