I've stayed in Mountain Village for the past few years (The Lodge at Mountain Village) and have to chime in that there is little 'convenience' lost by staying in Mtn Village. Its a gorgeous 20 minute or so Gondola Ride from the parking garage in Mtn Village to Telluride, and then a 10 minute or so walk to the festival grounds. The gondola runs until about an hour after the Nightgrass events, in my experience, so there's no chance of getting 'stranded'.
If you're looking for accommodations that are stumbling distance to bars, late night venues and near 'the action', then lodging in downtown T-ride is definitely worth pursuing. However, if you don't mind having to be a gondola ride away from town and lodging in a much quieter, yet still amenity-laden locale, Mountain Village lodging is definitely worth considering. Not to mention, the money saved on lodging can be spent on goods from the plethora of awesome vendors at the festival .. and .. more flank-steak and sweet-potato fries!!!
Best of luck in whichever approach you undertake.
/r
kevin
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"My wife and I attended our first TBF in 2008. (Needless to say it was the time of our lives.) We camped for that one. This year we will be initiating 3 couples to the joys of the fest. Unfortunately they are not the camping type so the only way to talk them into coming was the promise of a condo. I am noticing a huge price discrepency between the properties in Mt. Village and the properties in Downtown Telluride. I can only assume that this price difference is a reflection of the convenience lost by staying in Mt. Village. I am hoping that some of my fellow festivarians can do their best to educate me on the best solution for our trip"
Listening to:
"Dont Think Twice" .. Garrison Keillor version .. aired 30 Jan on Prairie Home Companion on NPR.