Lake Louise is arguably the most beautiful location on earth. The hiking around Lake Louise, especially Yoho National Park and near Bow Summit doesn't get better. Where to stay? Well, is you're not set up for camping but want an economical choice to those 200 dollar rooms in Banff-LL try hosteling.
Hosteling International has two big, busy, well equipped hostels in both Banff and Lake Louise but our favourite is Castle Mountain, located right in the middle. It is small with 2 dorms: one for women and one for men. The bunks are comfortable and it has indoor toilets and a nice kitchen.
We especially appreciate the efforts of the manager, Tony, who runs a very tight ship: it is spotless, quiet, organized. For people who enjoy a little quiet and coziness I recommend Castle Mountain. The location of the hostel also allows more opportunity of seeing wildlife, including bears, from behind the safety of the picture windows.
Families with active, rambunctious children or party animals would be happier in the bigger hostels - there's more to do and you can easily find a party nearby.
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