Easily the best choice in Zahara, Arco de la Villa has a commanding view of the town. The room was simple and basic, but clean and a good value for the money (only around 50-60 euros IIRC). The room also had a really nice view of the reservoir near Zahara, and is within walking distance of the Moorish castle and the town, which was my favorite pueblo blanco (or "white village") in Andalucia.
P.S. Breakfast at the hotel rocks - it doesn't get any more traditional Spanish style than that.
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