I have stayed at the Fairmont Olympia Hotel several times. It's in a nice location with easy access to museums, restaurants and the waterfront, without being in the hordes of cruisers (even when I was one of them). If you have time, take the ferry to bainbridge island, charming island with unique shops (pricey) and you can rent a bike and cycle around the island or tour the wineries. Don't miss a visit to the ye olde curiosity shop on the waterfront, my kids love the odd things to see and buy.
deborahg