With either the direct airport bus or the new RENFE cercanias C-1 train that goes directly downtown, you are not very far from central Madrid. Both go to the Atocha train station, where there are lots of reasonable accommodations. Since you will be all alone in a restaurant if you go to eat before 10:30, it seems to me that you would indeed be able to have a very nice evening if you got into a hotel around 9:30 or 10:00. And since your flight is so late in the day, you could even have a nice breakfast in town before heading out. You certainly wouldn't have to get on the train or bus back to the airport before 11 am. So, if it were me, I'd definitely go into town.

But if you don't want to do that, and if you want to stick to the metro rather than the train or bus, I think the AVda. de Americas area is probably the closest for an area with hotels and commerce. If you go to google maps and type in Intercambiador Avenida de America, Madrid, Spain, you will bring up the location of the metro and can search for hotels inthe vicinity. There are a lot.

Thanks for suggestion and assistance.
I did find Hotel T3 Tirol, which seemed ez to get to, on the Argüelles Station line, which is one transfer, cost $94 CAD.

Just wondering, spudley, is there a reason you prefer the metro to the other two options -- the airport bus and the RENFE C-1 line are probably going to be much quicker.

Thanks for response lreynold, it is probably due to my ignorance of the public transport in Madrid, but I assumed that the Metro Subway would be more comfortable, quicker and less likely to run into delays than the bus(49 minutes with one change). We are taking the express bus on our earlier visit to Madrid, and staying downtown for 5 days, however, this is the beginning of a lonnng trek back to Canada, and thought that we would have a slow and early night in a comfortable and familiar style room.....at a reasonable cost. After all we are retired and need to watch our $$$. I did try to book a number of places downtown and all were booked.

I'd be interested in learning what you decided, Spudley, as we're in the same boat in November, though we can arrive in Madrid earlier in the day.

Metro is a sure shot, Renfe trains, there is one every 30 minutes and if you miss it, you have to wait. Bus is good but depending of the hour you can face , traffic jams.
Metro from the airport to Argüelles, will take about 1 hour.
Hotel Tyrol was renew no long ago and it is a good value for money, you realized this is at the other side of town, from the airport area. Though is a nicer area than the Avenida de America one.
Have fun