Budapest: Go deluxe for a lower price

Just 16 years on from Hungary's Soviet era, Budapest may seem an unlikely dream destination for sybaritic travellers. But for anyone in search of real luxury - and mindful of what they may have to spend to get it - the Hungarian capital is a close-on perfect place for a weekend break.

Here you can sip champagne (well, delicious Hungarian sparkling wine, pezsg - look out for those made by Torley); dine on foie gras (Hungary is the world's second largest producer after France); and spend days in spas and nights at the opera. And all for a fraction of what you would pay further west. Or in Moscow, come to that.

Back in 1867, the Austro-Hungarian emperor Franz Josef declared that he wanted to make Budapest a Habsburg capital the equal of Vienna, an ambition it's fair to say he achieved. It may not have the glorious wedding-cake palaces, the wealth and order of the Austrian city (though neither does it suffer from the same smugness). But Budapest has art, music, numerous galleries and a host of museums - devoted, among other subjects, to terror, sewerage, policing (with stuffed police dogs), ambulances, firefighting, electrical engineering, commerce and catering, Bibles, Hungarian sport, the Hungarian postal service, telephones and underground transport, as well as Old Masters. And it has at least a couple of truly grand hotels.

The obvious luxurious option is the Four Seasons Gresham Palace, by the Chain Bridge on the Pest side of the Danube. The hotel's secessionist building is a fantastical confection, with luminescent, azure-tiled cupolas and turrets, fanciful Art Nouveau carvings, and details in gold mosaic that sparkle in the sunlight. It was built in 1906 by the London-based Gresham Life Assurance company, and there's a portrait of the 16th-century English financier Sir Thomas Gresham, after whom it was named, set high on the façade. The company intended the building to be the grandest edifice on the entire river, with a shopping arcade on the ground floor, offices on the first, and apartments for aristocrats, among them the British, German and Russian royal families.

In 1952, the building was nationalised and became social housing. Not that you'd know, for its transformation into a hotel in 2004 cost $120m (£63m), and you can see where the money has been spent. The glass dome that lights the lobby has been glazed with individually moulded opalescent panes, the better to refract the gauzy light below. Its intricate, stained-glass panels and wrought ironwork have been meticulously restored, in some cases by descendants of the original artisans whose skills had been passed down the generations.

And of course, the spa is super-luxurious, offering treatments that end with a glass of tokaji, Hungary's glorious signature wine. This is certainly more redolent of my idea of being pampered than the brutal, if authentic and almost absurdly cheap, massages on offer at the legendary Gellert thermal baths, where a vigorous 30-minute massage costs less than £10, and the facilities run to an "inhalatorium" and, scarily, a dentist.

Yet the really big factor distinguishing the Gresham Palace from other luxury hotels elsewhere in Europe is the price. For instance, at its revered and similarly opulent Parisian sibling, the Four Seasons George V, the lead-in rate for a double room is €710 (£507) per night. At the Gresham Palace double rooms start at €310 (£210) per night.

When the Gresham Palace opened, it easily eclipsed the competition despite the fact that a lot of the major international chains - Le Méridien, Marriott et al - have branches here, mostly strung out along the embankment in buildings that should never have received planning consent. However, in May, the Italian Boscolo group reopened the New York Palace Hotel in downtown Pest. It rivals the Gresham at least in terms of restored grandeur. This time it was a Manhattan insurance company that commissioned the building, in 1894. Ostensibly it was constructed in the image of a Renaissance palace, though the result is more Gotham Gothic than Italianate, with a great, now glassed-in, courtyard-cum-atrium that serves as the lobby. The interiors have been lavishly restored with acres of marble, bronze and Venetian glass; even the standard rooms have silk-lined walls, chandeliers and marble bathrooms.

It's a tough choice between this and the Gresham. But if you opt for the latter, at least drop by the New York Café for a drink, partly to pay homage to the memories of film directors Alexander Korda (of The Private Life of Henry VIII) and Michael Curtiz (of Robin Hood, and Casablanca), who used to drink here before they left for London and Hollywood respectively.

But you should also admire the stucco friezes of angels and satyrs, the velvet chairs and chrome and crimson plexiglass tables that comprise the fabulous decor, all the work of Adam Tihany. The celebrated Hungarian-born designer has an extensive international portfolio that also includes Le Cirque in New York and Shangri-La's Jade on 36 in Shanghai.

Both hotels are justifiably destinations in themselves, but it would be a shame not to explore the rest of the city. If Franz Josef hoped that 19th-century Pest, which lies east of the Danube, would come to resemble Vienna, then older Buda, which rises beyond the opposite bank, recalls another Habsburg capital - Prague.

There are not so many spires and fewer film-set, winding lanes, but then there are no human statues, no tawdry souvenir stands on every other corner, and no seething crowds - or at least not beyond Buda's Castle Hill, the city's tourist honeypot and the only part that gets clogged with coaches. Head north into Baroque streets such as Uri utca, and you'll find yourself in a sleepy backwater, a worldaway from the style, sophistication and the luxury to be found across the river.

Four Seasons Gresham Palace (00 361 411 9000; fourseasons.com/budapest) offers doubles from €310 per night. The New York Palace Hotel (00 36 1 8866 111; boscolohotels.com) has doubles priced from €263.50, with even better value weekend packages available.

Wizz Air (00 361 470 9499; wizzair.com) flies to Budapest from Luton; easyJet (0905 821 0905; easyjet.com) from Bristol, Gatwick, Luton and Newcastle; Sky Europe (0905 7222 747; skyeurope.com) from Stansted; Malev (0870 909 0577; malev.hu) from Edinburgh, Gatwick, Heathrow, Manchester and Newcastle; and British Airways (0870 551 155; ba.com) from Heathrow

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