Set on the southern part of the beach near the temple road. Varkala Marine Palace has a great ambience both during the day and at night time. A great spot for watching the daily beach life of the locals and the fisherman repairing and sorting out their nets and boats. The food here is excellent! Good service (can sometimes be a little slow at busy times but that doesn't matter as it's still a lovely place to relax) and friendly staff. They also do rooms and we were lucky enough to get a couple of nights here during our stay, but it gets booked up quickly.
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