The following hotels are all around 400 meters (437 yards) or less from the Rathausplatz, where the main Christkindlmarkt takes place. Each also has (when I last checked) a user rating at booking.com of at least 8 out of 10:
1. Austria Trend Hotel Rathauspark Wien* (4 stars)
Located in a town palace built in 1882 and reopened in March 2016 after two months of alterations. My parents stayed here when they visited at Christmas a few years back and were very happy. My dad would always pop out in the early evening just to grab a quick bag of roast chestnuts from the market.
2. Hotel Pension Residenz* (3 stars)
Small, old-Viennese style hotel located behind the prestigious University of Vienna.
3. Radisson Blu Style Hotel* (5 stars)
It has five stars, so you don’t have to worry about whether there are fresh rolls at breakfast. It’s on Herrengasse on the other side of the Ring boulevard, so is even closer to the Freyung and Am Hof Christmas markets.
4. Steigenberger Hotel Herrenhof* (5 stars)
As above – the two hotels practically adjoin each other..
5. The Levante Parliament* (5 stars?)
Self-styled “Design Hotel” which is its own gallery, too: you can buy the beautiful photos and decorative glass art on display.
This one’s a little unusual – a guesthouse that’s part of the Schottenstift (a working Benedictine Monastery dating back to 1155) and quiet: there are, for example, no TVs or radios in the rooms. Excellent value for the incredibly central location – it’s actually next to the Freyung Christmas market.
Other hotel options
Although the Christkindlmarkt is the main market, there are several others that are smaller, but still impressive. So hotels in and around the center of town* may well be close to a Christmas market of some description.
Also, Vienna’s municipal transport system is top quality. Trams and subways are fast and frequent, so you can get to most market locations pretty easily even if you’re staying a little further away.