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Kayseri and Nevşehir are both outside (to the E and W respectively) of the true Cappadocia area.

Göreme, Ürgüp and Avanos are the main (small) towns of Cappadocia but there are other villages with accommodation with Avanos being the largest and most "Turkish" but also with the least accommodation.

For the short time you have to spend and given the time of year I suggest Göreme unless perhaps you want to splurge for a really nice place at a very off-season price in (nearly as convenient) Ürgüp.

While you can certainly just arrive and find accommodation I do recommend that you make advance reservations and also arrange for convenient and inexpensive transportation from the airport (most likely Kayseri) to your hotel. I also suggest that you pre-arrange with your hotel for the balloon tour and any other tour you may want to take. The people and businesses in the Cappadocia area are very fair in their business. Just be certain that you are dealing DIRECTLY with the hotel/hostel/etc. and you can be nearly certain that the prices you receive are as good or better than if you do things on your own and more importantly you won't waste time upon arrival finding accommodation and arranging a balloon flight and/or tour(s)!!

On the subject of reservations, you should ALWAYS reserve Istanbul accommodation in advance!

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In January the only village with anything going on is Göreme.The others will be pretty much sleeping :)
You don't need a taxi from Kayseri;once you have booked your accomodation ask them to book you onto the shared airport shuttle which is a door to door service and costs only c.25TL per person.
When booking your hotel do make sure they have a proper hot water and heating system installed and don't just rely on solar systems!Most do have these but there are still one or two who don't.

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In response to #8

I'm not sure where you're coming from or how much time difference but Istanbul (especially your first visit) is an awful place to recover from jet lag! >

Hi swampeastmike, why do you say Istanbul is an awful place to recover from jet lag? My wife and I will be flying from Sydney, Australia to Istanbul in a little under two weeks. It will be our first time there and my wife will be 20 weeks pregnant. I'm curious to know how I can go about making the jet lag recovery less awful.

Thanks

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Istanbul is a sprawling beehive with people, people, everywhere people most chugging about at their duties for hours on end. Its vibrancy is infectious. When you hit the long haul jetlag wall it's still difficult to rest. Try allowing for two days with a light schedule where one or both of you crash at least once.

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Riding a hot air balloon in Cappadocia was one of the best travel experiences of my life! I highly recommend it!

One thing to keep in mind regarding your time in Cappadocia is that if the weather is not ideal, the hot air balloon flights will be cancelled for the day. In the off season (when you are planning to go), cancellations can happen a few days in a row. I was just there two weeks ago an was fortunate in that weather was fine on the day I went and I didn't have any problems. I had a friend who was only there for two days, however, and balloon flights were cancelled both days he tried to go. Some of it is luck but your chances to fly are better if you're there for a longer period of time. This can also be extended by having an afternoon flight when you leave. The cost is generally around $150 per person but you may be able to get slightly cheaper when you're going.

Make sure to arrange the balloon reservation ahead of time and book a company with lots of experience in a balloon with 16 or fewer passengers. Based on where you choose to stay, they may have a recommendation and a possible discount as well.

Regarding transportation to Cappadocia, flights through Turkish Air, AdadoluJet (owned by Turkish Air) and Pegasus are generally the cheapest. Expect to pay around $25-$60 each way to/from Istanbul, on average, during the off-season. Check the websites for flights to some of your other destinations as well. I paid around $30 to get there from Istanbul and around $20 to fly out of there to Ankara.

Buses are another option if flights don't work with your schedule. Based on the number of questions I've received after my recent trip to Cappadocia, I put together more detailed information and price ranges here. This also includes ideas on airport transportation, where to stay in Cappadocia and my favorite restaurant in the area.

Enjoy your trip! I hope this helps!

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