The sign inside that says 'Wherever I lay my hat, that's my home' should help clear up the name of this central design hostel in La Latina. Just 150 metres from Plaza Mayor, The Hat offers sunny, cheerful rooms to suit all guests, from spaces with bunk beds for groups with shared lavatories to single and double rooms with private bathrooms – some even with a small balcony. You'll find simple yet practical Nordic design and decor, free WiFi, and a 24-hour reception. The big draw here, however, is the rooftop, which is also open to the public, and where plenty of locals hang out to pass the afternoon with a few beers.
You don't have to max out your credit cards or take out a second mortgage to book a place to stay in Madrid. From designer hostels to small, charming hotels, the options for accommodations in the Spanish capital are many and varied. And even better is that you needn't trek out to the sticks to get a good deal, as most of these spots are in central neighbourhoods. Have a look at our list of the best cheap hotels in Madrid and save your euros for discovering all the things to do among this city's best of culture, entertainment and gastronomy.