L´auberge Inn

Quito offers very expensive or quite affordable accomodations. No matter what your budget is, L'Auberge Inn Hostel is always a good choice. It's located just outside the historic centre of Quito. The hostel has a nice garden in the courtyard and coasy lounge with fireplace and pooltable.
Rooms are basic, but comfortable. You can also choose to rent a cheaper room with chaired bathroom.
Breakfast is excellent and the small adjacent pizza parlor also offers good value.
If you make a reservation before arriving in Quito you get a free pick-up from the airport.
http://www.auberge-inn-hostal.com/

A big old place set within walking distance between the Old and New towns. Rooms are fairly basic and can be a little dim. However they are generally large and spotlessly clean. Staff are consistently friendly and helpful and the day staff speak excellent English.

The Inn is not really for the party crowd - if you want that then head for the Mariscal, but if you are after something a little more laid back then this could be the place. Decent breakfasts are available each morning for a low price and there is a relaxed little restaurant open every night beneath the hostel that serves great pizza, lasagna and local beers.

The only problem is getting the local taxi drivers to find it. Make sure you know it is on the Avenue Columbia or you will be greeted by plenty of blank stares.