We stayed for long weekend in Hotel do Carmo. The staff was very friendly, check in was fast and smooth. Hotel room was clean, but a bit tired, renewing would be nice. Located in center, but quiet place. WiFi is free, but only in the lobby. Hotel provides parking lot for those, who have a car, for 6eur/day. Did not choose breakfast which costs 10eur/person. There are plenty cafeterias around to have nice morning coffee. Request the room away from elevator, it makes some noise during the night, since the walls are very thin.
In general -- we would probably stay again, on the next visit in Madeira.More