We stayed at the Xiangnan Hotel in Dinghai city. Other than the beautiful promenade and lavish-looking restaurant by the water there's not much going on in the town. We first walked over an hour looking for restaurants - only seafood available - we finally found a restaurant at the promenade that serves a buffet but charges you per tea set.
The Xiangnan Hotel was average. We didn't dare take our shoes off in the rooms because the carpets are in an embarrassing state and the breakfast was a warm Chinese buffet.
Also, the town is fairly far (about 40km) away from Putuoshan and Taohuo island.
I would make Dinghai city a drive through destination (for a walk on the promenade) but not an overnight spot.
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