Madikeri is a very over rated tourist destination but if you do have to go there, the Hotel Mayura Valley View run by Karnataka tourism KSTDC, is an excellent location on top of the hill with a 360 degree panoramic view of the Coorg valley.
Rooms are clean, comfortable and reasonably large. A hearty Breakfast is included in the room rate of Rs 1200 for a standard double. All these rooms enjoy a good view, the same view that you will get from the nearby Raja Seat garden. A few deluxe suites are on the first floor, and work is in progress to increase the number of rooms.
A restaurant and bar is attached to the hotel with a patio that overlooks the same valley. The menu especially for vegetarians is limited, but the food is very tasty and served up piping hot. Alcoholic drinks are very reasonably priced. Coffee surprisingly was not up to the mark, perhaps I expected something superior given that we were in Coorg. With the addition of extra decoction it was passable!
Raja Seat garden is a 5 minute walk from the hotel. The hotel will arrange sightseeing for you at additional cost. Most people want to visit Talacauvery and Bhagamandala, Abbey falls, the Tibetan settlements at Kushalnagar / Bylakuppe, Dubare elephant camp and Nisarghadharma tourist complex.
In our opinion, the best parts of Coorg are not these, but the lush green area on the Siddapur Polibetta road going down into Nagarhole NP. Having said that, if the sights listed above are what you want to see then Madikeri is a good base and the Mayura Valley View is a value for money place to stay in.
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