Hostal Lluhay
Lord cochrane 458
(http://www.hostal-lluhay.cl), near the docks at 458 lord cochrane ave. sits high from the road to provide wonderful views of the quaint city and harbor. breakfast included. there is internet and a sitting room with a grand piano and traditional decoration. many lodging options. inexpensive.
Hostel TerraMar
Downtown and up a steep hill. check the bed before accepting a room - ours was horrendous, sinking in the middle almost to the floor. 5,000 pesos per person 2/06. no breakfast.
Hostal Mundo Nuevo
Costanera s. allende 748, (http://www.newworld.cl). a very nice and clean hostel with a views at the sea. they speak english, german and spanish.