I'm giving this hotel a '4' based primarily upon my travelling companions' experience, not mine, particularly since I neither booked the room nor paid for it.
I stayed at this hotel for five days at the beginning of May. All the staff were extremely pleasant and helpful. I was travelling with friends, and their room, at the front of the hotel, was large, very attractive, and had two balconies. I had a tiny single room on the top floor, under the kitchen and next to the cleaning supply closet. The kitchen staff started working at 6 a.m., the cleaning crew at 5:45 a.m. My room's only window opened onto an extremely noisy alley, which (strangely, since there seemed to be no mosque in the immediate area) contained a loudspeaker (emphasis on the loud part of that word) which played the first call to prayer around 5 a.m., since this was in early May.
We were there during Orthodox Easter weekend, so the hotels downtown were charging full freight. We traveled only by taxi (there was a metro station within easy walking distance, but unfortunately we didn't use public transportation), and it usually took at least 30 minutes to go to the main tourist areas. There were many restaurants and a nice shopping area very close to the Atik Palace. My understanding is that the rooms were quite a value compared to the prices being charged downtown. The taxi fares, however, may have leveled the playing field somewhat.
My room, although small, was quite clean. The bed was comfortable, and the bathroom was modern. My friends' room was old-world luxurious. Were it not for the unacceptable level of noise, I would have had a very pleasant stay.
A buffet breakfast is served on the top floor; tables are available on the adjacent balcony. The setting was attractive, and the food was good. No Turkish coffee was offered, which was the only downside. There is a small coffee bar in the hotel's lobby, but we didn't use it.
I hope to return to Istanbul -- it was a fascinating city with friendly, helpful people. And I would certainly consider staying at the Atik Palas again. But not in my old room. (Please see comments section below.)
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