Prague was a travel bargain not that long ago, but times have changed. Sure, it is still inexpensive as compared to some other European capitals, but it is no longer a city only barely discovered by students and backpackers. With the influx of big bus tour groups has come a rise in the overall price of accommodation – but the good news is you can still find cheap hotels in Prague, even right in the center of the things you want to see.
There are two sides to Prague, a new city and an old city – and while there is certainly merit to the new city (where most residents who are not involved in the tourism industry actually live and work), if you are only visiting for a few days you are well advised to book your cheap hotel in Prague in the old city. You will be within walking distance of most things you want to see, and surrounded by the charm of old Prague when you step outside your hotel.
Being within walking distance of the picturesque Old Town Square is ideal, but this area does tend to be a little more expensive if you are really on a tight budget. There are lots of hotels in this neighborhood, though, and some of the mid-range ones offer quite a bit more for the price than you might get in some other European capital cities. The area around Wenceslas Square can be relatively noisy at night, as can the Old Town Square itself, so be aware of that if you are a light sleeper. In many ways, it is both cheaper and more enjoyable to stay not right on either square but a short walk away.
A few budget hotels in Prague to consider are Hotel U Medvidku (a hotel and restaurant/beerhouse within walking distance of both the Old Town Square and Wenceslas Square), Hotel Mustek (small hotel with 13 rooms not far from Wenceslas Square in old Prague, there is a sauna in the hotel and a seafood restaurant), Winston Churchill Hotel (not far from the old town, offering double rooms and larger suites for more people), Hotel Cloister Inn (a short walk from the famous Charles Bridge and Old Town Square, it is a little more expensive but the location is great and the service is fabulous), and The Castle Steps (right at the foot of Prague Castle on the other side of the river from the Old Town).