An old Madrid classic, this former palace of the Duque de Lerma opened as a hotel in 1911 and was Spain’s second luxury hotel. Ever since it has looked out across Plaza de Neptuno at its rival, the Ritz, like a lover unjustly scorned. It may not have the world-famous cachet of the Ritz, but it’s not called the Palace for nothing.
Rooms are suitably luxurious and they're large with a classic style. After the snooty Ritz banned actors and other public performers in the early 20th century, the Palace became the hotel of choice for celebrities – Mata Hari lived here during WWI and her ghost reportedly occupies the corridors, while Hemingway, Dalí and Lorca were all regulars in the cocktail bar.