As much research as I do before a trip, I usually don't get around to city layout until right before leaving. This is the biggest mistake ever (and one I keep making somehow). Four-star hotel at a two-star price? There's a reason for that. LOCATION, LOCATION, LOCATION.
It started with Dubai. I booked a package through European Destinations that included flights and hotels. The hotel looked perfect -- modern, clean, great TripAdvisor reviews. After booking it, I ran it past Jeff (who we were going to visit there) and he told us that the hotel was literally near nothing but the airport. We changed the reservation immediately.
In Barcelona, we thought we hit the jackpot. Huge modern room, rooftop pool, TOWEL WAMERS -- all for less than $70 pp a night. What the reviews didn't say was that the hotel was in a sketchy-ass neighborhood. One we had to risk walking through every day to get to anything we wanted to see. Other option: take a pricey cab.
In Edinburgh, I finally learned my lesson and did a tiny bit of research before booking. We landed a great room right in the center of town for a bit more money, but it was perfect. We could go back to our room and pick up things we forgot. Change clothes after a rainstorm. Freshen up before dinner. All without having to worry about time (or safety).
It makes no sense then, that I reverted to my old ways and booked a hotel over a mile outside of the city center in Reykjavik. A place that, in winter, isn't great for walking around. For just $50 more a night we could have been smack in the middle of town, but no. My Jew instincts kicked in when I saw the total price for the trip and we booked the four-star, but far-as-hell hotel. I immediately regretted this decision. Literally. Right after pressing send, I contacted Icelandair to change the hotel in our package, but they said I'd have to cancel the pre-paid reservation and book again. Meaning I'd be charged twice for a little while. I wasn't prepared for that, so we kept our initial reservation with the Hotel Natura. This led to 30-minute walks into town, expensive cab rides in a snowstorm and even a dinner in the hotel because we were trapped by weather and so far from literally everything.
I'm sure Planet Money could do a much better breakdown of how much you're ultimately saving by putting down more money upfront on the hotel (NPR, you listening?), but here's my conclusion: when it comes to location vs. price & luxury, ALWAYS go location. You'll save money in cabs, public transportation, and most importantly, you'll save time. Most likely you won't be back to wherever you visited anytime soon, so make the most of your time there! Spending 30 minutes walking to the city center every morning is not how I want to spend my vacation. Nor is a 30-minute walk back to my hotel after a night of eating and drinking. So suck it up, do your homework, and splurge on that two-star hotel in the center of the city. After all, you're only going to be sleeping there.
Note: Yes, I'm aware that Airbnb is a great alternative to hotels, but unless you have more than two people traveling together, often times its not more affordable. It's also difficult to navigate a new city (especially one where you don't speak the language) so having a concierge and easy taxi access can be super helpful.