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The good news is that hotels and hostels in Banos, Ecuador are easy to find and very reasonably priced. But there will almost always be something wrong with even the nicest rooms. At least this is our experience in all of the seven or eight places we have stayed at over the years.
One hotel we stayed at ran out of hot water each day if you didn't get up early enough for your shower. Another had a leak in a water pipe that left a trickle of water running across the bathroom floor to the drain - it was tough to see and tough to remember not to step in it in the middle of the night. Another ran out of water, and we had to move to a new hotel.
On our most recent stay (October 2007), we stayed at "Plantas Y Blanca." This translates as "Plants and White," which describes the appearance pretty well. Everything is painted white, and there are plants in every corner. We particularly loved the rooftop terrace. The photo below is taken from there.
It cost us just $15 per night for a private room, but they operate as a hostel as well, with beds starting at about $6 per night. There are steam baths for an extra charge (we didn't try them). After breakfast (the kitchen/dining area is on the roof), you are free to use the kitchen to cook your own meals if you like, and there are some snacks and drinks - including beer - that you can buy. Just take what you need and write it on the form with the room number.
In general, you can get a decent room with a hot shower for under $20 in Banos. There are certainly more expensive places, including some high-end resorts on the edges of town, but there are also some great deals if you come during a slow time and negotiate a little (try paying for a few nights in advance to get the best deals). We like the hotels and hostels that are closer to everything. Fortunately, there are probably twenty or more that are within a five-minute walk of the market in the center of town.
Be sure that you are clear what you are paying. Many hotels charge by the person, so $7.50 may mean $15 for the two of you (as it did in our case). Ask if there is plenty of hot water (if that is important to you). Plantas Y Blanca had a television and movie rentals in a common area, but none in the rooms. many have cable TV. Many hotels also include breakfast in the price.
Hotel operators are usually happy to show you a room bfore you decide, so ask if you are not sure. And if you want to be close to the nightlife, the bars and nightclubs are mostly on Alfaro Street.
