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Parking is free and usually plentiful at most of the main tourist attractions on Lanzarote. In Arrecife, the island capital, and Puerto del Carmen there are pay and display regulations in place. Denoted by bays with blue lines  which are prominent for example on the main Avenida de las Playas in Puerto del Carmen.

Yes, it is $7 to park, and is within easy walking distance to the Sheraton.