Although many of Cuernavaca's most famous hotels are posh spa retreats set outside the city center (these are the places that attracted monied residents of Mexico City, who come down regularly from Mexico City for the weekend), there are a handful properties downtown, which puts you within walking distance of key cultural attractions, such as the Robert Brady Museum, as well as some fun gay-friendly cafés and bars - here's a guide to Cuernavaca gay nightlife.
One especially pleasant option is Hotel Casa Azul (Calle Gral. Mariano Arista 17, 777-314-2141), a walled-in garden compound set on a side street about six or seven blocks north of the main Plaza de Armas. Rates at Hotel Casa Azul start around US$110 on weekdays, and about US$160 on weekends.
This intimate hotel with an extremely friendly staff is set around a small, curving swimming pool, adjacent to which is the hotel's inviting little restaurant. A filling and tasty breakfast, included in the rates, is served in this restaurant. Lush gardens and tropical plants provide plenty of shade and greenery, around the cafe and pool - the grounds aren't extensive, but the owners have definitely put plenty of effort into creating a lush, relaxing environment right in the middle of a quite busy downtown.
The hotel has about 25 rooms, each decorated distinctly with artwork that relates to the region's rich archaeological history as well as the art and culture of others areas in Mexico - the name of each room reveals the decorative style it relates to, from Chiapas and Puebla to Chihuahua and San Miguel de Allende.
Each room also has plenty of modern touches like flat-screen TVs, free Wi-Fi, and small but very modern bathrooms.