We stayed one night at La Cabaña Hostel, located in Aguas Calientes-Machupicchu where you get off the train, on the recommendation of a member of IgoUgo. Cost was $30 a night.
The staff spoke decent English, but were nowhere near as friendly as this other person experienced. The hostel is up a steep hill, squished in between stores and restaurants on the busy pedestrian road. No scenic views to speak of.
Breakfast was included, but only consisted of bread, instant coffee/tea and juice.
Unique Qualities: We were first given a room with a balcony overlooking the street (#18). The room was clean and decent enough, although we had to ask for toilet paper and there was no soap. But the street was noisy so we moved to #14, in the middle of the hall but with a window to the interior staircase. This room had several flaws: the curtains had to be closed with a safety pin, the bedlamp on the left was permanently turned off, as the headboard was fastened against it, and the bathroom door could not open all the way due to lack of space. Also, the toilet mechanism was broken and we had to keep the tank open to pull on the chain (we were too tired to ask for it to be fixed). Also we requested a fan that never appeared - and would have cost $5 extra.
Although it did have hot showers, there was no hot water faucet at the sink. Somehow, the place made my nightshirt smell for two days afterward, sort of a musty dirt smell.
There are plenty of other places to stay at Aguas Calientes, most of which are not listed online or in the guidebooks. But it's probably best to pay a little more - in this case, we paid about the same as at Los Niños in Cusco but got a lot less.
There was another hotel on the same pedestrian road where a group from Wisconsin was staying - looked nice, had good security - Hotel Machu Picchu Inn, I believe was the name. It's the long, yellow building on the left side of the ped steps as you go up the hill. If there were a next time, we'd probably try there, even though rates look to be about $100 a night.
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Theme: Hostel
Comparison: about average
Prices: US$20-40
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Phone: 84211048
Address: Pachacutec pedestrian road
Directions: On the left side of the bridge after you get off the train. Go up through the market by the new train station, go over the bridge and over one block onto the ped road, then head up the hill (see picture).
Website: none