We spent wonderful days in Hotel Colonial. Used it as our "home-base" while traveling Nicaragua. It's situated in the city center, next to the main place in front of the cathedral. Nearly every interesting spot in Granada lies in walking distance.
The hotel has beautiful gardens inside, the two pool areas are very nice, one of them ist equipped with a tiny pool bar. The rooms are beautiful, airconditioned and very clean. The swiss management, including staff is very friendly. Breakfast in the beautiful garden is the perfect start to a wonderful day in Granada. We can highly recommend this place.