I have stayed at this establishment twice. Once in the rainy season, when I thought the empty swimming pool and cows grazing in the garden might have just been an off-season thing, and more recently in early March 2013, which, if not for the recent sectarian violence in Rakhine State, would be the time of year when you might expect to see tourists. At that point I realised the pool had probably never been full, and the wandering dogs and cows were well settled and very comfortable in their seaside resort home.
Not surprisingly, this hotel has an aura of abandonment. But I am reliably informed by people who travel to Sittwe often, that this is the best hotel in town. It can be completely booked out with aid workers. The wide corridors and large rooms just make it feel more empty than it actually is. The rooms themselves are clean and large, if sparsely decorated and for some reason they provide very cute showercaps with little ducking pictures on them. The electricity and hot water were reliable during both my stays there, the free wifi less so (i.e. not at all - fairly typical for regional Myanmar).
The hotel restaurant is not bad for regional Myanmar - the pancakes for breakfast were particularly good. The staff were friendly and clearly trying their best. The big issue here, as with most places in Myanmar, is that the staff have never seen a hotel in a more developed country (say Thailand), so they don't realise what is standard elsewhere and how far behind Myanmar is. That is not their fault, and the staff at Royal Sittwe were clearly keen to please and generally very helpful.
The only thing I would add is that the rooms are ridiculously overpriced. I paid $100 a night for a junior suite - not that I wanted a suite, but this was what was available - I think somewhere between $40 and $50 would have been a fair price for what I got.