We too opted for the cheap room but realized that for a 5 night stay, we didn't want it. Our room's window opened to the lobby. When we talked to Alan, the desk man, he upgraded us to a huge room upstairs for the same price! The hotel is in a perfect location, Alan is a big help and very nice, and the room was great and the air conditioning worked well. (very important).
I was disappointed in the hotel's swimming pool. It is in a corner of the lobby and small. I had been hoping to swim. It is more for dunking.
The people in Granada were all very friendly. We even knew the begger's name! I would return to Granada in a heartbeat, just because of the friendliness and ambience.

Hotel Alhambra was quaint, nicely decorated and certainly the oldest building in Granada. Our room consisted of 4 single beds for our family. Very clean room considering how old. You had a t.v. with many channels-only one English. A good sized bathroom-only the shower head-you had to run around to get wet! The air conditioning worked, however, it was 200 years old as well and kinda' smelled musty. The pool is in the court yard like most of the colonial casa's in Granada - the rooms built around the court yard. Our room wasn't one of the ones I had hoped for (balcony over looking park central), but it was clean and we made do.

The overall property is wonderful. It was great to be right on the main square and the lobby area and front porch are lovely. I think the rooms vary quite a bit. We went for the "cheap seats" at $50 a night and got a room that was very dark with the only window out onto an air shaft with a view of a wall. The sink drain leaked but we got three towels so we just put one under it. The room also smelled very mildewy whenever the a/c had been off. The beds were also a little mildewy smelling. We are not very picky, though, so we didn't bother to complain or try to switch. For $50 it seemed fine to us. Some other people we met there were in an $80 room with a balcony overlooking the town square and they said their room was lovely. I'd definitely stay here again but might upgrade the room.

This is a very good place, a main hotel in the main square of this nice city. I have got great memory in this place, a luxury for Nicaragua standards and also for me, after many cheaper accommodation around central America. But the price is still good for a european tourist