Stayed here last September, great place and great holiday. Rooms are basic but service was great: staff were really helpful in recommending places to visit and how to get there. Close to the town centre but you have to drive or take a taxi as there isn't a path to walk on (taxi is around 10-12 Euros). Never had dinner in the hotel but other guests gave great reviews of the food, even though the selection is limited. Dinner is served later at night though. Once you're down at the waterfront in the town visit the restaurant called Re Ferdinando, good food, good service, pricey though but everywhere is here I guess. I'd also recommend visiting La Maddalena via the ferry at the port, more bars and restaurants there. Also, Santa Teresa isn't that far a drive from Palau, neither is Porto Cervo (20-30mins I recall), so this hotel is a good place to stay to be close to the various good places to visit. When we went to Porto Cervo many shops were closed as it was the end of the season but still had a walk around the port, had lunch looking out at the yachts, very nice, but didn't stay for long as it was very quiet. If you can, visit Alghero, long journey but lovely town, especially the old town. I'd also recommend taking the boat trip around La Maddalena which you can arrange through the hotel, seems they offer better rates than if you were to book down at the port. Boat visits a few different islands/beaches and offers a decent lunch on the trip as well (seafood pasta).