Hondarribia is divided in two...the upper town and the lower town. Upper town is older and traffic free and is where you must find your way to the Hotel Palacete. Our GPS failed us here, but an amazingly nice local man walked in front of our car and led us to the door of the hotel. Parking is a little tricky since there is only one reserved space and that space was occupied by a local car, not a hotel guest. There is a carpark nearby, just all a bit challenging when you're new to town.
The hotel didn't disappoint. Rooms and baths are contemporary and cheerful and immaculately clean. The family that runs the hotel provides very friendly service and they do a very nice breakfast either inside or out the door on the adjoining terrace.
Be sure to visit the very helpful and nearby Tourist Information for helpful suggestions and explanations in English since very little is spoken locally.
For the lively restaurant scene, you walk to the lower town...about 10 minutes.