Depending on your budget, there are many beautiful hotels, in my experience in Funchal. Im married to a local, tho we live in FL. i can recommend The Eden Mar/ PortoMare Hotels, they have excellent accommodation usually on a B&B package. Tho upgrades are available. Both Close to the lido, and if you enjoy walking, the ocean promenade either way, in or out of Funchal. Madeira is hilly, so be prepared!
Both hotels have excellent, friendly personnel and both hotels have entertainment and are right on the ocean.
The local buses all stop on the main “hotel corridor” or a taxi stand right outside. Bus ride into Funchal 10 minutes or walk one way and bus back.
Other hotels The Savoy, (a splurge) or Pestana Carlton Madeira is closer to town. Great accommodation and friendly personnel. Great breakfasts. Ask for a room on a higher floor! Fab views.
Madeira is beautiful, however no sandy beaches. Weather can be inclement and be prepared for flight diversions during the winter months, (pack appropriately……..just in case.) Hoteliers are used to flight diversions and can’t be very accommodating.
A word of caution……..Try poncha a local drink made from Fruit and sugar cane. DO NOT drink more than two!
Enjoy your trip. We always go for Christmas. To very different from the mainland. Take a nice outfit. It’s posh in many hotels if you like to dress up.