I did a lot of research on different hotels in Cusco, and it seemed like you could either spend a lot or you could compromise on location or comfort. In the end, we booked a package for Machu Picchu which included the hotel in Cusco and I was very happy with their choice. The Maytaq is conveniently located near the main Plaza de Armas and has very comfortable, cozy rooms. The street that it is on is narrow but can be rather busy during certain times of day. However, the windows very effectively block out the noise. The breakfast was good and available very early in the morning. Although we did not eat dinner at the hotel, some of our traveling companions did and raved about it (especially the ceviche). I did see one guest using the oxygen from the hotel, which is key for anyone concerned about the altitude. The staff was extremely friendly and they have a locked storage room to store extra luggage while you go to Machu Picchu if necessary. I would not hesitate to recommend this hotel to anyone traveling to Cusco.
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