From basic rooms to luxury suites, accommodations in Canela offer better value for your money than in trendy (often overpriced) Gramado. A block away from the main praça, Pousada Canela (Rua Ernesto Dorneles 333, tel. 54/3282-8410, http://pousadacanela.com.br, R$90) is a spanking new apartment-style pousada whose basic, compact rooms are bright and attractive. Two larger suites are ideal for couples with kids.

Shaded by araucária pines and overlooking a small lake, the Grande Hotel Canela (Rua Getúlio Vargas 300, tel. 54/3282-1285, www.grandehotel.com.br, R$140–160) dates back to 1916. Although hardly grand, the comfortable yet rather sedate rooms—in the main building or in individual chalets—are enhanced by old-fashioned fixtures. The common areas are more atmospheric. Aside from a coffee bar, fireplace lounge, and piano room, there is a nice pool, a sauna, and Jacuzzi.

Located in a beautiful old summer residence dating back to the 1930s, Quinta dos Marques (Rua Gravataí 200, Santa Teresinha, tel. 54/3282-9812, www.quintadosmarques.com.br, R$215–450 d) is one of Canela’s most charming accommodation options. Each of the 13 seductively cozy rooms is individually decorated (the more lavish ones include hot tubs and fireplaces). Custom-made bath products, afternoon tea, a pretty pool, and a “Zen space” in the woods where you can meditate in a Japanese hot tub are soothing extras.