Itathao Vacation Hotel

For the price range of this hotel, we expected a fairly low standard since we stay in lots of budget hotels in Taiwan, and they tend to be old and ugly inside, but we were pleasantly surprised to find that the room was very new, clean, nicely decorated, and well maintained. We even had a view of Sun Moon Lake (5th floor, those below might not), though a little far away. There's an elevator to the rooms. It's on the main road around Sun Moon Lake, but only 3 minutes walk to the main street/night market in Ita Thao.

The two beds were a little small. It was a room for 4, but we ended up making a bed for the kids on the floor because it was a bit tight to share the beds.