Rest your fears, amigo. With two borderline exceptions, we have not stayed in a budget hotel since 2004. Those exceptions were the Posada de La Villa (pretty basic and older), and the Hotel Casa Galeana, (newer, nicer and noisy) both in Morelia. Neither of which would be on our Top 5 List, however. Since then, we have made it a point to spend the necessary money in order to be comfortable.
These are our top picks.
Mexico, D.F. is where we usually stay in hotels these days, going to and from the Aeropuerto Benito Júarez (MEX).
Hotel Milán, Av. Álvaro Obregón, Colonia Roma Norte. (Map) This is a 3 star hotel which is well located in a pleasant zone of the city, near parks and fountains, restaurants, coffeehouses plus new and used book stores. The rooms are modest in size but nicely renovated. The bathrooms are small but very clean and functional. Sometimes there is free wi-fi in the rooms.*
Hotel Catedral is our choice when staying in el Centro Histórico. It's a couple of blocks north of La Catedral. It has all the amenities but still, despite its increased popularity among Lonely Planet fans, its rates are still affordable. Book by email and save by not opting for the breakfast in the hotel restaurant. Save even more by paying en efectivo.
Also in CH, we have stayed at the Hotel Gillow, the Catedral's older sister hotel, on Isabel La Católica at Cinco de Mayo, and we didn't think it worth the extra money. The Gillow has great, 1930's Art Deco style in its lobby and public spaces, but the room we had, though large, was quite worn.
Similarly, the cute Hotel Canadá on Cinco de Mayo itself has a pleasant staff but tiny rooms and street noise. The chief advantage of the latter two are their terrific location in the very center of the CH. The wonderful Jugos Canadá is next door. The Gilipollos chicken restaurant is across Cinco de Mayo. (I confess; we haven't eaten there yet, but the '30s and '40s style Cafe La Blanca is only a block away.)
Back in Colonia Roma, we have recently pampered ourselves at the Hotel Stanza (used to be called Hotel Parque Ensenada). The rooms are like the Catedral, but a higher notch in amenities and style. The rates are reasonable for the quality and service. We like it because it's a great place to rest while decompressng after a visit to the U.S. It's the closest decent hotel to Hamburguesas a la Parilla, just 3 short blocks north on Calle Morelia.*
*Note that both my Colonia Roma choices are within convenient range of several Bisquets Obregón restaurants, including the Mother Ship of all Bisquets in Mexico. They are notable for serving decent fare at good prices.Breakfasts, accompanied by café con leche, are a strong point.
Puebla, Puebla.
We have only been in Puebla once, and we chose to stay at the quirky but pleasant Hotel Imperial. In a way, it's a semi-budget hotel. They offer a geezer discount, if you show an INAPAM card. They also include a Manager's cena, but it's pretty basic. There's a breakfast included, a bit more elaborate. There's wi-fi, and it works. The location is quite central; a few blocks to the Zócalo. The rooms are old, and worn, but we were comfortable. We opted for a Suite Ejecutivo, as the price was so reasonable: $550 less INAPAM discount. In your spare time, you can get in a few holes of mini-miniature golf, while in your bathrobe. (Included in the Suite Ejecutivo price.)
Oaxaca, Oaxaca.
Really, we've only stayed in one hotel in Oaxaca, the Casa Arnel. We have a great deal of affection for this hotelito and the family and staff that runs it.
On our first stay, in the early '90s, we skimped and took a very minimalist budget room, resembling a barely converted mop closet. Since then, Casa Arnel has renovated and improved so that the rooms are pleasant, although they could not be called luxurious. The attractions, besides the hospitable family, are the green leafy patio and the neighborhood. There is a small restaurant for guests, serving breakfasts, drinks and light meals.
Barrio Jalatlaco
The location is within 7 blocks of the first class bus station, in the picturesque Barrio antiguo Jalatlaco. It's a 20+ minute walk to the Zócalo, but an interesting paseo. A few blocks away is the Parque Júarez, better known as El Llano, a very relaxing and pleasant place.
Casa Arnel is in a fairly quiet neighborhood, but there is sometimes noise from other guests out in the patio.
For longer stays, they have some basically furnished but pleasant apartments a few doors up the street.
Bonuses: A nice, inexpensive Morelia hotel; and a very nice expensive B and B:
1. Hotel Plaza Morelos.
We don't need to stay in Morelia very often, as we live 45 minutes away. But sometimes there are occasions when we are in the city for some special event, for example the recent Lila Downs concert. We stayed one night at the Hotel Plaza Morelos, just off Avda Acueducto, on the west side of the eponymous plaza. Behind the colonial facade is a modern hotel. They have renovated parts of it, so you have a choice of "nice" and "better" rooms. None of it is luxuriously appointed, but for only $450 pesos (special promotional rate, usually $650), we had a very large room with 2 beds, a large bathroom, an unusually large closet space, free wi-fi, a Continental breakfast. Quibbles: the desk was silly, designed for tiny people with low knees, and there's a good sized outdoor swimming pool, but it didn't attract me because the water looked overdue for a change.
2. Now, if cosmetic defects bother you, such as paint spatters on the walls or unfinished wiring, or that the two sections of the building join in a skewed juncture, pass up the Plaza Morelos and get a reservation instead at the Posada de San Antonio, nearby on the leafy, tree lined Calzada Fray Antonio de San Miguel, where you'll pay $1200 pesos a night for tranquility and peace and near perfection, plus a full breakfast, attended to by unusually amiable hosts. There are only 3 guest rooms. Some have great bathtubs, and plentiful hot water.
The map. Note Plaza Morelos just east of the Posada San Antonio.
This concludes my hotel picks for now.