Good choice. I have tried to get a room there for some visitors that came down from Norway, and both times they were sold out.
My wife and I have had coffee in the small café on the main floor. Good standard and nice enviroment. The hotel has a small garden in the back, this is not very normal for Santiago. It is a quiet spot with almost no street noise.
We stayed there for a total of 5 nights, they were so busy and booked ahead that we stayed in 5 different (and lovely rooms). We had intended to stay at the Parador as a treat but after one night at Costa Vella we loved the view, the ambience, the little terrace cafe, the people, so much that we just stayed on. How many hotels do you end your stay by being hugged by the staff and feeling just the same about them! We got the name from our Brierley guidebook.
Beautiful terrace, I agree, the food is good, too. But, 2 pricey, for me. I've been staying in the modern side of Santiago, at a very nice hotel, 33 euros per night-"Hotel Maycar." It is across the street from a Cafeteria appropriately called "Miami," within walking-distance from the old part of town. Best, xm 8)