Posted: 3/7/2023 | March 7th, 2023

Melbourne is probably my favorite city in Australia. While Sydney boasts the more iconic tourist attractions, Melbourne is more laid-back and a hub for arts and culture.

Home to over five million people, it has a diverse population and something of a European feel, home to plenty of festivals, art exhibitions, live music, stunning street art, chill bars and cafés, and delicious food. You could easily spend over a week here and only scratch the surface when it comes to things to see and do.

While public transportation goes everywhere, Melbourne is a bit sprawled out, so it’s important to choose the area where you stay carefully, otherwise you’ll spend most of your trip in transit.

To help you decide where to stay in Melbourne, in this post, I’ll highlight the best neighborhoods below so you can choose the area that suits your travel style and budget as the neighborhoods in this city all have their own feel.

But, before I get to the specifics, here are some common questions I get asked about neighborhoods in Melbourne:

What’s the best neighborhood for first-time visitors?
City Center, or “the CBD,” as locals are prone to call it, has something that will please most travelers. It’s crammed with great museums, monuments, cafés, restaurants, and bars. It’s the most central spot for doing lots of sightseeing.

What’s the best neighborhood for families?
St. Kilda is an old bohemian swath that happens to have the highest number of restaurants in town. But the neighborhood is also home to Luna Park, the world’s oldest theme park, plus it’s situated right on the sea. (Note this is also a great area for backpackers too!)

What’s the best neighborhood for shopping?
Shopaholics will be in heaven along boutique-lined Chapel Street in South Yarra.

What’s the best neighborhood for foodies?
Fitzroy is laden with incredible eateries — from classic and traditional bites to cutting-edge spots. I also think this is just a cool area to hang out in too.

What’s the best neighborhood for feeling like a local?
Richmond, located east of the center, has a diverse number of things to do that locals partake in, like eating, drinking, and shopping. Plus it’s home to “Little Saigon.”

What’s the best neighborhood overall?
It’s hard to pinpoint just one Melbourne neighborhood as “the best,” but City Center fits this category because of its location and because it has a little bit of everything for everyone, no matter what your interests are. That said, I also love St. Kilda too.

With those questions now answered, here is a more specific breakdown of each neighborhood — with suggested accommodation for each so you’ll know where to stay in Melbourne.

Where to Stay in Melbourne for First-Time Visitors: City Center

“The CBD” (an acronym for “Central Business District”) may not have a particularly sexy name, but it does have something most other neighborhoods in Melbourne do not: a little bit (or in some cases a whole lot) of everything. Shopping, dining, museums, cafés, galleries, and even nightlife are all represented here. Start at the iconic Flinders Street Station, which was the busiest railway terminal in the Southern Hemisphere in the 1920s, and then fan out and explore the center of Melbourne, including the popular Federation Square and nearby National Gallery of Victoria.

Best Places to Stay in City Center:

• BUDGET: Mercure Welcome — Smack in the center of it all, this is a nice budget-friendly spot. Mercure may be a global chain, but it’s also a reliably good one too, and this location is no exception. The 330 rooms are tastefully bedecked with plus-sized beds, minibars, and desks. Some rooms have great views over the city too.
• MIDRANGE: Brady Hotels Central Melbourne — This boutique hotel has a gym, self-service laundry, and rooms with soft, queen-sized beds, minibars, balconies, and Urban Skincare Co. bath products.
• LUXURY: Treasury on Collins — Arguably the most elegant hotel in the CBD, the heritage-listed Treasury on Collins offers rooms that are apartment style: large, multiroom accommodations with kitchens, sofas, desks, king-sized beds, washing machines, and more. If you want to feel like you’re temporarily living in Melbourne, this is a pretty good place to do it.

Where to Stay in Melbourne for Families: St. Kilda

An old bohemian haunt that was also at one time the red-light district, St. Kilda is a beachside swath that is home to Luna Park, the world’s oldest theme park that’s fun for all ages. There’s a beachside boardwalk to explore and a fun arts-and-crafts fair on Sundays. It also happens to boast the highest number of restaurants in town. Start out on Acland Street, where the blocks are lined with eateries.

Best Places to Stay in St. Kilda:

• BUDGET: Sixty Two on Grey — Just a few minutes walk to the nearest tram stop and a 12-minute walk to Luna Park, Sixty Two on Grey has apartment-style guest accommodations with kitchens and very comfortable beds, all for a budget-friendly price.
• MIDRANGE: Tolarno Hotel — Founded by artist Mirka Mora and her husband, who arrived in Melbourne after fleeing Poland during World War II, the Tolarno has been a St. Kilda fixture for decades. Each of the retro-furnished rooms is unique, the walls of which are bathed in a different color and bedecked with pieces by local artists.
• LUXURY: Quest St. Kilda Bayside — The 56 suites at Quest St. Kilda Bayside offer everything a family would want for a stay in this fun neighborhood, including kitchens, washing machines, and multiple bedrooms. The hotel is within walking distance of all of St. Kilda’s attractions, including Luna Park.

Where to Stay in Melbourne for Shopping: South Yarra

South Yarra boasts sculpture parks, art galleries, and verdant gardens, but the main reason to plant yourself here for a while is for the superlative shopping. Don’t miss Chapel Street, a road flanked by boutique shops, where you can max out your credit card (or at least window-browse local and European designers). The area also has a lot of indie coffee shops too!

Best Places to Stay in South Yarra:

• BUDGET: South Yarra Hostel — Set in a Victorian house, this hostel has a huge kitchen, a barbecue area, and an spacious common room. It’s small and cozy, with a super friendly staff.
• MIDRANGE: The Claremont Guesthouse — Housed in a Victorian building from 1886, the Claremont offers various room types, from fully equipped apartments to double rooms, with ceiling fans and flat-screen TVs. Breakfast is included.
• LUXURY: The Olsen — Set right on Chapel Street, the Olsen is perfectly placed to take advantage of the South Yarra shopping scene. The hotel is art-themed, including works by landscape artist Dr. John Olsen (for whom the hotel is named) sprinkled around the property. Rooms boast big, comfy beds and unique works of art, plus there are two restaurants and a day spa.

Where to Stay in Melbourne for Foodies: Fitzroy

Once a solidly working-class neighborhood, Fitzroy has blossomed into a magnet for food-loving locals and visitors alike. The streets are now flanked by restaurants of every stripe — from those dishing up diverse non-Australian fare or locally sourced, locally inspired dishes to pubs serving elevated grub and cutting-edge, trend-setting eateries. Start on Gertrude Street, which is something of a microcosm of this culinary enclave itself.

Best Places to Stay in Fitzroy:

• BUDGET: The Nunnery — Life in this building was once very different than it is now. Housed in an erstwhile convent, The Nunnery today is a fun, active hostel where travelers of all stripes hang out in the large guestroom between meals. The sleeping options include dorm-style rooms — with anywhere from 4 to 12 beds (including some female-only rooms) — as well as private rooms for one or two people.
• MIDRANGE: Royal Derby Hotel —Over a century and a half old, all the rooms here are spacious and include a kitchenette with a toaster, microwave, and fridge. The in-house pub is one of the best in the neighborhood.
• LUXURY: Lyf — Located on the border of Fitzroy and Collingwood, Lyf is a hip, 128-room property that includes a fully equipped common kitchen and a laundry facility for guests to use. The apartment-style rooms will make you feel like you’re living in the coolest part of Melbourne.

Where to Stay in Melbourne for Living Like a Local: Richmond

Richmond is an up-and-coming area that, like Fitzroy, is brimming with delicious eats. Unlike Fitzroy, though, it’s more of a local affair, complete with its own Vietnamese enclave known as “Little Saigon.” If you want to feel like a local and get away from most tourists, this is a great neighborhood to do it in.

Best Places to Stay in Richmond:

• BUDGET: Knightsbridge Apartments — Located just west of Richmond, Knightsbridge is one of the only affordable options in the area. The no-frills rooms are cozy, and include free Wi-Fi, AC, and a small kitchenette.
• MIDRANGE: Lanbruk Richmond Hill — The 26 rooms and suites at the Lanbruk are stylish and large, with coffee machines, toasters, teakettles, and desks. Some offer incredible views of the neighborhood. There’s also a rooftop terrace with scenic views over the area.
• LUXURY: The Motley — This five-star hotel celebrates Richmond’s past as the center of Melbourne’s fashion and textile industry. The interior of the hotel — its lobby, halls, and rooms — are bathed in color and accented with rich textiles. The hotel is also home to works by many local artists. The stylish and spacious rooms have massive soft mattresses, high-end furniture, and amazing showers.

Melbourne is a lively, fun city perfect for backpackers and budget travelers. Since it’s so spread out, it’s important to pick a neighborhood that best suits your interests so you minimize time getting around. But, no matter where you stay, you can’t really go wrong since everywhere in Melbourne is awesome!