If you're travelling on a budget, coming up with places to stay that are both wonderful and affordable can be a tricky task.
The Hotel Grotta Palazzese sits upon the limestone rocks of the ancient Italian town of Polignano a Mare. Fodor's Travel Guide describes the destination as "one of the most romantic settings in all Italy". The property has just 25 rooms with an intimate feel, with some overlooking the Adriatic and others the old town. Although the property is pretty basic, the setting is just breathtaking and for $100 per night for a single room won't break the bank.
Since I haven't stayed at this property, I had a quick look on tripadvisor and the reviews are very mixed ("needs refurbishment"- a big red flag in my book). It seems that the rooms and facilities aren't all that but that you are essentially paying for the spectacular setting. As with anything, read the reviews, do your homework and make sure the place fits your expectations.