I was in two minds as to whether to write about this hotel and restaurant, in fear of it being discovered by the masses - but then I remembered that this is really a niche website so if you read this then you deserve to know about this place. :)
We had a fantastic 5-course meal at the Fauda Restaurant on Boxing Day, costing between 120NIS - 150NIS per person without alcohol. The service was impeccable and the staff were so friendly, they even took care of our baby almost the entire time! You must book this restaurant in advance, as the chef sources the seasonal ingredients from local farmers - I never knew that Bethlehem is famous for its pork!
The venue is fantastic - a beautifully restored old building that could have once been a palace, but I am not sure about this. It did remind me of other 'palaces' that I've seen around Palestine, but in any case it was just a wonderful setting. In summer it also has lovely shaded areas to enjoy breakfast or lunch, away from the crowds but still very central in Bethlehem.
We did not have a chance to see the rooms, but our friends stayed there and said it was absolutely wonderful.
We cannot wait to go back next time we visit Bethlehem.