Sydney’s transport is good enough that no central choice is a mistake. What differs is atmosphere and price.
The CBD and The Rocks
Circular Quay, the Opera House, the Bridge, the ferries.
Suits: first visits, short stays, anyone who wants to walk out into the harbour view. Trade-off: the most expensive area, and the CBD empties in the evening — the eating and drinking is elsewhere.
Darling Harbour and Barangaroo
West side of the CBD, with newer hotels, the aquarium and the convention centre.
Suits: families, conferences, and anyone who wants a modern room at slightly less than Circular Quay prices. Trade-off: Darling Harbour is a tourist precinct rather than a neighbourhood.
Surry Hills and Darlinghurst
Ten minutes’ walk from Central, terraces and laneways, the best restaurants in Australia.
Suits: almost everyone. Central without being in the CBD, and you can eat within five minutes of your door. Trade-off: few harbour views, and some streets are noisy at weekends.
Newtown and the Inner West
Ten minutes by train from Central. Cheaper, scruffier, excellent food and live music.
Suits: longer stays, younger travellers, anyone on a budget who does not want a hostel in the CBD.
Bondi and the Eastern Beaches
Sand out of the door, the coastal walk, a strong café scene.
Suits: beach holidays and summer. Trade-off: no train — it is a bus from Bondi Junction, and forty minutes to the CBD. In winter it is a long way from anything.
Manly
Ocean beach on one side, harbour on the other, and the ferry.
Suits: anyone who wants the commute to be the best half-hour of the day. Genuinely lovely. Trade-off: thirty minutes to the city each way, and the last ferry sets your evening.
The Lower North Shore
Kirribilli, Milsons Point and North Sydney — a bridge or a short ferry from the city, with the classic view back across the harbour.
Suits: quiet, views, and being ten minutes from Circular Quay.
What to check before booking
Distance to a station or ferry wharf, which matters more than distance to the CBD.
Whether “harbour view” means it. Sydney hotels are creative about this. Look at photographs taken from the room, not from the roof.
Noise, in Surry Hills, Darlinghurst, Kings Cross and the Bondi strip.
Air conditioning, for December to February.
Whether there is a kitchen. Sydney eating out is expensive and serviced apartments are common and good value for longer stays.
Seasons
December to February is peak, with the last two weeks of December the highest of the year — New Year’s Eve is a citywide event and hotels with harbour views charge accordingly and book a year out.
June to August is cheapest, though Vivid in late May and June pushes rates back up.
The short answer
First visit with budget: the CBD or The Rocks. Best all-round: Surry Hills. Value: Newtown. Summer beach trip: Bondi or Manly.
Apartments over hotels
Sydney has a large stock of serviced apartments, and for anything over three nights they usually beat hotels — a kitchen, a washing machine and a separate bedroom for meaningfully less than an equivalent hotel room.
Short-term letting is regulated in New South Wales, with a registration requirement and a 180-day cap on non-hosted lettings in the Greater Sydney area. Legitimate listings carry a registration number.
Hostels
Concentrated around Kings Cross, Central and Bondi. Standards vary; the Bondi ones are the party option and the Glebe and Newtown ones the quieter.
Arriving and leaving
If you have an early flight, note the airport is only eight kilometres out and there is an 11pm–6am curfew, so nobody needs to stay at an airport hotel for a dawn departure — the first train is around 4.30am.
Kings Cross and Potts Point
Worth mentioning separately. Kings Cross was Sydney’s red-light and nightlife district and was hollowed out by the 2014 lockout laws; it is now much quieter and considerably safer than its reputation, with a good deal of accommodation at reasonable prices.
Potts Point next door is elegant, full of Art Deco apartment blocks and small restaurants, ten minutes’ walk from the CBD, and one of the better-value central choices.
Both are on the T4 line at Kings Cross station.
What a harbour view actually costs
Sydney hotels price the view aggressively, and the difference between a room facing the Opera House and an identical room facing a wall in the same hotel can be double.
Whether it is worth it depends on how much time you will spend in the room. For most visitors the answer is that a cheaper room ten minutes from the water plus a coffee on the MCA rooftop each morning delivers most of the same thing.
The exception is New Year’s Eve, when a harbour-facing room is a fireworks ticket and is priced as one.