On the basis of reviews here on tripadvisor we decided to stay at Kim Ngan. We had a great time and found everything clean and functional. I'd say this hotel is a pretty safe bet. The lady in charge (maybe she's Kim Ngan - I don't know) was on the ball, spoke good english and was always ready to help us.
We stayed one night in a 12 dollar room on the 3rd floor. Small balcony. No view to speak of. Towels and soap missing. Small TV just a speck, across the other side of the room from the bed where we wanted to collapse after a long day of traveling. Not a fantastic start, but not terrible either for 12 dollars, everything else was inorder. They quickly and apologetically sorted out our towel and soap problem and we discovered 2 large bottles of water in the fridge (nice touch - 10,000 each - not bad). Powerful air conditioning and a duvet -like blanket rather than a plain sheet brought back the feeling of luxury and we were happy bunnies. Especially when we saw the prices of the room service menu - very reasonable indeed.
We spent 3 more nights in a 15 dollar room on the 6th floor. This price includes breakfast. We later discovered that breakfast options were rather limited as most of what is on the menu was not available. Maybe we were unlucky in our timing as other posts here recommend the banana pancakes which were not available for the duration of our stay! This room had 2 double beds (one bigger than the other), a bath tub, and a big balcony looking out to the water in front and the mountains on either side. Really brilliant. We had no problem with noise from other guests or the street.
The location of the hotel is fine as long as you don't mind a little walking. It's a little more than 5 mins to the beach and then a walk along the coast until you decide where you want to settle. Probably another 10 mins to the sailing club, for example, which provides nice beach chairs, umbrellas, drinks and masseurs. If you'd like to in the heart of the bar and restaurant area I think this place may not be ideal for you. There are plenty of cheap hotels closer to tourist-central.
Other comments on the hotel: the manager recommended a couple of good Vietnamese restaurants which were indeed excellent but totally out of our modest budget! One place we can recommend is Lac Cahn, popular with tourists and locals alike for table-top BBQ style food, not for seafood though.
The hotel can sort out tours for you (boat tour to 4 islands 100,000 VND) and hire out motorbikes (120,000 for an automatic and 80,000 for normal). They also have internet access for free and a skype headphone set, set up and ready to go.
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