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I highly recommend the Hotel Plaza Mayor. Great location in the thick of things: just off the Plaza Mayor, without being too noisy or congested. Reasonable prices--about 70-80 euros for a double--comfortable rooms, friendly staff,etc.
Sounds nice. Any other suggestions for somewhere a bit cheaper? Not too much cheaper, just a bit. Also, where's the best 'first-place' (area) to visit... i.e. any suggestions where we should go for the first night (is there a "most-do-this-first" spot?)