I've stayed at this hostel twice on trips to Madrid. It's rooms are scrupulous clean and beds comfy. yes they can be noisy, but what do you expect on the corner of the main thoroughfare of a 24 hour city? It's located just off Gran Via, so a stone's throw from Sol, a stroll from Chueca, spitting distance of Prado & Retiro, a skip & a jump from Palacio Real. The views from the eighth floor bedrooms are fantastic. Ask for a room with a view of Cibeles, you'll be able to see the wedding cake post office, the Retiro park & if you are lucky the distant sierras.
You will notice a lot of street walkers in this area. However, the area is perfectly safe. I have walked up & down C/Montera as a young, lone female at all hours of the day & night and received zero hassle. There's even a slick, modern police station on the street.
The hostel front door is also right by an entrance to the metro to make getting to and from the airport a dream.
The rooms aren't super cheap if you are travelling alone but if there are two of you or you've got a (only slightly) more generous budget then I would sincerely recommend a stay here.
You can also book the hostel through hostelworld.com
Directions: Gran Via metro
Gran Via 38, Madrid, Madrid
Paseo de la Castellana 22, Madrid
Plaza de las Cortes 7, Madrid, Madrid
Calle del Carmen 4, Madrid
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Address: Calle de la Montera 47, Madrid, 28013, Spain