Though the usual instinct when choosing a hotel in a European capital is to opt for a central location, sometimes a city is best discovered from a real-people neighborhood instead. The handsome new 78-room URSO Hotel & Spa is located in the Salesas district, which has much in common with New York City’s Greenwich Village or London’s Notting Hill. An arty and atmospheric area with lots of one-of-a-kind boutiques and excellent restaurants, it is nonetheless just 15 minutes from the Prado museum, ground zero for most visitors to Madrid.

The hotel occupies an elegant early 20th-century limestone palace that was renovated by Spanish hotelier Pablo Carrington, who also owns several properties in the Balearic Islands. He hired designer Antonio Obrador to create a look that highlights the original features of the building — wrought-iron balconies, stained glass, an Otis elevator — as a foil to modern rooms that come with hardwood floors, earth-tone color schemes, grasscloth-covered headboards, white cotton duvets and parchment lamp shades. This contrast between the traditional and the contemporary is even more successful in the hotel’s public spaces, including an attractive lobby with chinoiserie-style wallpaper and overstuffed chairs and sofas. Overall, the feeling is that of a patrician private house rather than a hotel.

The Table by restaurant showcases a different Spanish chef every month, with an emphasis on bringing young talent from the provinces to the capital. The URSO also features Madrid’s first branded luxury hotel spa, which uses products from Spanish skin care specialist Natura Bissé and includes a wood-lined lap pool and steam room.