We had the pleasure of staying at Azul Marino 3 nights in November and really enjoyed our stay. The posada is bigger than I anticipated: I went in expecting a home converted into an inn, and instead found a beautifully designed boutique hotel. The rooms were spacious, very clean, with modern/rustic feel and decor. I would definitively recommend staying upstairs to enjoy the views and the balconies, and if you can splurge on the jacuzzi room, it is absolutely worth it. The balcony in this room is the biggest (the size of a livingroom - really big) and since it faces west, you'll be able to enjoy glorious sunsets and a distant view of the Jose Ignacio lighthouse.
Regarding location, the hotel is basically surrounded by nature. When you look out the window all you see are trees and the beach in the distance. It's very peaceful and quiet, most times all you hear is the sound of birds singing. Take the time at night to look up... I have never seen so many stars...
Keep in mind Jose Ignacio is the quiet brother of Punta del Este so don't expect a lot of nightlife around here (especially during off season). The beaches are absolutely amazing and serene, and the hotel is maybe 15 minutes away from what I thought was the best seafood restaurant in town: Parador La Huella (PLEASE have the calamari). The architecture in the area is stunning. I'd say this hotel is better suited for couples or families that want to get away than for young/single travelers that want to sunbathe by day and party by night.
If you do stay here, the hotel is veryyy close to Haras Godiva where you can enjoy horseback riding on the beach.
I greatly enjoyed my stay, and would be happy to go back to this hotel when I return to Jose Ignacio.
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