The American Colony Hotel
While the American COlony may not have all the amenities of a mammoth 200-room chain hotel, but it more than makes up for that with atmosphere. Oh, and all the 5* stuff is still there: excellent service (without being over the top), good food and a very good wine list, pool, massages, fitness, travel services, free room internet, etc.
Unique Quality: East Jerusalem may not be the best address in the city, but there's little that can beat the American Colony for atmosphere. The setting is such that you can easily imagine all of the former guests there in the lounge, reading the newspapers and sipping coffee/tea/something stronger. Winston Churchill, Jimmy Carter, Ingrid Bergman, Bob Dylan, Mikhail Gorbachov, Lord Allenby, Peter O'Toole, Graham Greene and many others have all stayed there - and you can follow in their footsteps.
It also tends to attract a broader than usual range of guests, with journalists and diplomatic staff added to the usual complement of pilgrims and tourists. So, if one is of an easy-going nature, an interesting conversation in the lounge is almost guaranteed!