Returning from a two-week research trip diving the coral reefs and exploring remote villages, I can assure you that deciding where to stay in Palau island dictates your entire experience. Whether you want to base yourself near budget-friendly guesthouses for daily scuba diving excursions or prefer the pristine beaches of upscale villas, this western Pacific archipelago requires strategic planning. This guide breaks down the best accommodation options in Palau to ensure your visit is perfectly tailored to your travel style.
Best Hotels in Palau🔥
- 💎 Luxury Hotel: Palau Pacific Resort
- ✨ 5-Star: Palau Royal Resort
- 🏨 4-Star: Shell Villa Apartel Resort
- 🛏️ 3-Star: Airai Water Paradise Hotel & Spa
- 💸 Cheap: Lehns Motel
- 🏢 Apartment: Garden Palace Downtown Koror
- 👨👩👧👦 For Families: Ngermid Oasis
- 🏩 For Couples: Palau Carolines Resort
Quick Guide to the Best Areas
- 🏙️ Downtown Hub — Koror
- ⛵ Diver’s Base — Malakal Island
- 🌅 Upscale Retreat — Arakabesang Island
- 🏛️ WWII History — Peleliu
- 🌿 Nature & Culture — Babeldaob
1. Koror: The Best Area for Accommodation Options in Palau
Koror serves as the main gateway and beating commercial heart of the Palau island nation. As detailed in this travel guide, it offers the densest concentration of dining options, shopping centers, and quality Palau accommodation for travelers. If you want easy access to supermarkets and tour operators to snorkel, paddle, and experience Palau without needing a rental car, this island is your best bet.
On-the-ground Feel & Insider Tips:
Walk along Main Street to browse the WCTC Shopping Center, dive into indigenous history at the Belau National Museum, and view cultural artifacts at the Etpison Museum, where exhibits reflect a deep commitment to conservation across Palau’s 340 islands, some of which are recognized by UNESCO.
Make time to grab a bite at Bem Ermii Burgers near the Asahi Baseball Field, a local favorite for its famously messy burgers, thick milkshakes, and casual outdoor seating shaded by palm trees, or opt for spots serving fresh seafood and even the occasional buffet breakfast catering to visitors arriving via routes from Guam or Taipei.
- Pro: Immediate access to supermarkets, restaurants, and museum highlights.
- Con: It lacks natural beaches and feels surprisingly urban; book day trips to the Rock Islands to get your fix of crystal-clear waters.
Best For / Skip If:
Best for first-time visitors, budget-conscious travelers, and those who want dining variety. Skip if you are seeking an isolated beachfront resort experience.
Best Hotels in Koror
💎 Luxury hotels
- Palau Royal Resort — Offers premium seaside accommodation featuring a private beach area, tennis courts, and close proximity to dive excursions.
- Palau Pacific Resort — Provides a high-end luxury getaway with a private pristine beach, an oceanfront pool, and beautifully designed villas.
⭐ Best Value Hotels
- Palau Hotel — A comfortable and conveniently located property offering modern amenities and a relaxed atmosphere close to local dining spots.
- Shell Villa Apartel Resort — Features spacious, home-like apartments equipped with modern kitchen facilities, ideal for families and small groups.
💶 Smart Budget Hotels
- Lehns Motel — A clean, budget-friendly option in central Koror that provides easy access to local markets and commercial hubs.
2. Malakal Island: Your Base for Scuba Diving and Marine Life
Connected to Koror by a short causeway in the Republic of Palau, Malakal Island is the undisputed staging ground to discover the best legendary dive sites and marine life. It bristles with dive shops, commercial marinas, vacation rentals, and lively waterfront restaurants. Often highlighted by Lonely Planet, this is where the energetic diving community comes together after a day beneath the waves to share their incredible experience in Palau.
The Lay of the Land & Local Advice:
Head down to Malakal Port to watch the dive boats return, relax at Icebox Park, and explore the nearby Coral Reef Research Foundation facility, with easy access to excursions across Micronesia including dive trips toward Ngemelis, Ukaeb, and even routes linking to Peleliu and Angaur.
Evenings are best spent at the Drop Off Bar & Grill, an open-air local favorite where fishermen and divers swap stories over fresh poke bowls after days exploring sites like the Golden Jellyfish lakes or offshore reefs. Navigating this area is straightforward, but renting a scooter from downtown Koror makes early morning travel to the dive docks much easier, especially if you are staying in a nearby hostel.
- Pro: You can roll out of bed and walk directly onto your liveaboard or day-trip dive boat.
- Con: The area is industrial with heavy port traffic; opt for accommodations slightly off the main commercial dock road for a quieter night’s sleep.
Best For / Skip If:
Best for dedicated scuba enthusiasts, young couples, and those seeking casual nightlife. Skip if you want quiet tropical gardens or a family-friendly luxury resort atmosphere.
Best Hotels in Malakal Island
💎 Luxury hotels
- Island Paradise Resort Club — Offers relaxed, spacious villa-style accommodations with access to an outdoor swimming pool and tropical gardens.
- Palau Central Hotel — A stylish, modern downtown property boasting comfortable rooms, an outdoor pool, and exceptional walkability to local restaurants and shops.
⭐ Best Value Hotels
- DW Motel — Provides quiet, budget-friendly rooms and helpful service, making it a highly popular base among independent scuba divers.
- Airai Water Paradise Hotel & Spa — Features a relaxing spa, traditional architectural elements, and family-friendly pool water slides in a tranquil environment.
💶 Smart Budget Hotels
- Antelope Guesthouse — A cozy, budget-conscious lodging option with warm hospitality, clean shared spaces, and a welcoming home-style atmosphere.
3. Arakabesang Island: Upscale Villas and Pristine Beaches
Also linked by a causeway, Arakabesang offers a quieter, more exclusive atmosphere compared to bustling Koror, Palau’s largest city. This lush tropical island in the Pacific Ocean is home to upscale retreats, luxury resorts offering premium diving packages, and tranquil white sand shorelines. Though famous properties like the Palau Pacific Resort dominate the coastline and provide easy access to the best diving, the entire island maintains a deeply relaxed, high-end vibe.
Navigating the Neighbourhood & Insider Knowledge:
Drive past the Meyuns Sports Field and the local Meyuns Clinic before winding your way toward the historic Japanese Seaplane Ramp on the western shore. Park near the old causeway to join residents on their evening walk, a beloved local routine that offers cooling ocean breezes and stunning sunset vistas. Because public transit does not reach this island, renting a car or arranging private taxis is essential for getting back to the city center.
- Pro: Unbeatable ocean views and access to Palau’s best resort amenities and private beaches.
- Con: Dining options outside of the resort restaurants are severely limited; utilize a rental car to drive into Koror for dinner.
Best For / Skip If:
Best for honeymooners, older couples, and travelers seeking premium hospitality. Skip if you are looking for budget-friendly guesthouses or a highly walkable neighborhood.
Best Hotels in Arakabesang Island
💎 Luxury hotels
- Palau Carolines Resort — Offers private, rustic wooden bungalows perched on a hillside with scenic ocean views and a peaceful, nature-oriented atmosphere.
- Sea Passion Hotel — A waterfront property featuring a private beach area, an outdoor pool, and scenic views of the surrounding Rock Islands.
⭐ Best Value Hotels
- Belau Almond Hotel — Provides comfortable, air-conditioned rooms and convenient access to local dining and shopping hubs in central Koror.
- Garden Palace Downtown Koror — Features well-equipped rooms with modern amenities, private balconies, and exceptional proximity to downtown landmarks.
💶 Smart Budget Hotels
- Yogi Homestay — Offers clean, contemporary accommodations with welcoming service, perfect for travelers seeking a comfortable and practical base in Palau.
4. Peleliu: A Deep Dive into Culture and History
Accessible by a bumpy ferry ride, Peleliu is an essential stop as a travel destination for visitors interested in profound WWII history. Surrounded by clear waters where travelers go diving, the island remains rugged, heavily forested, and incredibly quiet, offering a stark contrast to the modern comforts of the mainland. A trip to Palau, where every visitor signs the Palau pledge, is simply incomplete without understanding the monumental historic events that took place on these shores.
Atmosphere & A Pro Tip:
Explore the haunting remnants at Orange Beach, reflect at the Peleliu World War II Memorial Museum, and cautiously observe the entrance to the Thousand Man Cave. For a moment of pure tranquility, locals recommend visiting the Peleliu Peace Memorial Park just before dusk when the harsh sun fades and the site becomes incredibly peaceful. The state ferry departs sporadically from Koror’s Fishermen’s Port, so always verify the current week’s schedule at the dock before planning your journey.
- Pro: It offers unparalleled historical immersion and incredibly quiet, untouched landscapes.
- Con: Tourism infrastructure is extremely basic with very limited Wi-Fi; bring plenty of cash and download your offline maps in advance.
Best For / Skip If:
Best for history buffs, intrepid travelers, and those wanting a remote island experience. Skip if you require high-speed internet, luxury amenities, or fine dining.
Best Hotels in Peleliu
⭐ Best Value Hotels
- West Plaza Desekel — Located centrally in Koror, offering straightforward, comfortable accommodations within easy walking distance of key retail outlets and local dining options.
- Ngermid Oasis XL Studio — A peaceful residential retreat surrounded by scenic tropical landscapes, providing fully equipped, home-style comforts and desirable amenities.
💶 Smart Budget Hotels
- Belechl Ranch Studio Rental — Offers an off-the-beaten-path, rustic studio experience surrounded by nature, perfect for travelers seeking a quiet and independent stay.
5. Babeldaob: Exploring Lush Tropical Gardens and Traditions
As Palau’s largest landmass and home to Palau International Airport, Babeldaob is where you will discover traditional Palauan culture, ancient ruins, and dense jungles, making it a natural base as you get to Palau and settle into a quieter side of the islands with a few simple guesthouses and occasional hostel-style stays that can help manage a budget in Palau.
It is the perfect escape for adventurers looking to explore cascading waterfalls and untouched landscapes away from the primary tourism zones, while still offering a range of activities from inland hikes to day trips toward Ulong and exploring the Rock Islands. The atmosphere here is deeply rural and authentically Micronesian.
On-the-ground Feel & Insider Tips:
Drive the paved Compact Road to hike down to the spectacular Ngardmau Waterfall, admire the historic Airai Bai meeting house, and wander through the mysterious Badrulchau Stone Monoliths. Stop at the Ngarchelong dock area where locals frequently gather to fish, offering an authentic glimpse into the daily rhythms of island life. To fully experience the mainland, plan a full day trip starting by 8:00 AM and rent a high-clearance vehicle for the unpaved side paths.
- Pro: Incredible opportunities for hiking, kayaking, and experiencing genuine local traditions.
- Con: Distances between attractions are vast and public transport is non-existent; secure a reliable rental car as soon as you land.
Best For / Skip If:
Best for nature lovers, independent explorers, and cultural enthusiasts. Skip if you prefer to step out of your hotel directly into a bustling town center or a dive shop.
Best Hotels in Babeldaob
💎 Luxury hotels
- Palau Plantation Resort — Set in a lush tropical jungle environment, this unique resort features traditional-style cottages, a relaxing pool, and an atmospheric local vibe.
⭐ Best Value Hotels
- Ocean Star Hotel — Offers convenient and straightforward hotel accommodations in central Koror, providing travelers with cozy rooms and warm hospitality.
💶 Smart Budget Hotels
- Ngermid Oasis Studio Loft — A beautifully styled loft offering peaceful garden views, comfortable bedding, and functional self-catering facilities for a relaxed stay.
FAQ
What is the best area in Palau for first-time visitors?
Koror is the most practical choice for a first visit to Palau. It provides easy access to supermarkets, local restaurants, tour operators, and the main museums, making it the perfect central hub for organizing your daily island-hopping tours.
Where should you stay in Palau for the best scuba diving access?
Malakal Island is the premier destination for divers in Palau. The area is packed with commercial marinas and dive centers, meaning you can walk directly from your accommodation to the boats departing for the Rock Islands.
How many days do you need in Palau to see the highlights and Jellyfish Lake?
To truly experience the dive sites, visit Jellyfish Lake, and take a cultural day trip to Babeldaob or Peleliu, you should plan for a minimum of seven to ten days. This allows buffer time for decompression before flying and accounts for occasional tropical rain.
What is the best way to get around Palau during a trip?
While downtown Koror is walkable, the best way to explore Palau is by renting a car. Taxis are available but must be called in advance, and public transportation is incredibly limited outside of a few municipal bus routes in the main town.
Where is the best place to find budget-friendly guesthouses in Palau?
Downtown Koror and the immediate surrounding residential neighborhoods offer the highest concentration of budget-friendly guesthouses. Staying slightly off the main road provides better rates while keeping you within walking distance of affordable local eateries.
