Stay at Dubai's Newest Palace

DUBAI, UAE, Jan. 5, 2008 -- Even in the Middle East, few hotels can pull off a thorough "1001 Arabian Nights" feel. The Palace Hotel at Dubai's Old Town, just months into operation, does it with flair.

That flair is in the form of the Burj Dubai, a tower modeled on a desert plant and widely credited as the tallest building in the world. Rising next door to the hotel, the Burj can be seen through any lobby window and from any perch at the hotel pool.

In contrast to the glass-and-steel Burj Dubai, the hotel architecture consists of marble floors, vaulted ceilings and lush oriental accents. The hotel lobby is a modern take on the traditional Arab majlis -- a cushy sitting room with WiFi. Ornate pillows, colorful lanterns and mosaic coffee tables are the imported handiwork of artisans in Morocco and Syria, making the hotel a panorama of the Middle Eastern aesthetic.

The five-star hotel opened its doors in October to a neighborhood still under construction. Yes, there is some irony to the fact that, as of this writing, Dubai's "Old Town" is preparing for its grand opening -- reflecting the fact that so much of this shiny city has been built within the past five years. Also still being built at the base of the Burj Dubai is the Dubai Mall, pitched as the world's largest shopping center.

Nearness to the new city landmarks and the Dubai International Financial Center is one of the hotel's main selling points.

"We have a concept of a resort within the city -- services that a leisure hotel would offer but being very close to all the business areas, the residential areas, [and] this whole new development of downtown Burj Dubai," hotel manager Jean-Phillipe Bittencourt told ABC News.

Being located at the foot of the world's tallest building has its advantages, for the hotel and for the consumer. During my tour, there was no audible clash and bang from the nearby construction. Because the surrounding areas are unfinished, room rates are lower than they will be when the building is done. Rooms start at $335 per night, including breakfast if you book online, compared to $956 for the same package at the One and Only Royal Mirage, a Dubai-based hotel of the same class and interior design.