We stayed at Graywood on our Garden route tour in SA. It was a one night stay and it was okay. we found the room was small and since it was on the ground floor, it had no view no window to the outside. There was always some noise and disturbance. A big group of people arrived at the hotel late that evening and they created quite a din.
Otherwise the hotel is fine, breakfast & service was okay.
Location is very convenient with the waterfront at walking distance and lot of interesting places round the corner. Anyway the place is fine for one night.

We booked a 2 night stay through Flight Centre, UK about 7 weeks before travel. The hotel is on the corner of Gray Street, about three short blocks up from Knysna Quays.
Behind the Reception is a huge blown-up photo of British (GWR) steam engines on shed. The railway theme, mostly South African, persists throughout the hotel and grounds. The buildings form a two-storey square around a central garden and pool. Car parking is beneath the building on two sides of the square, with entrance from the side street. Most rooms are upstairs and all are wood-panelled. Rooms are a little smaller than average, although well appointed and with opening windows. A kettle and tea/coffee is provided. The breakfast room is immediately above Reception and there is also outside seating on the verandah by the pool. Breakfast is from a good cold buffet selection, with hot food cooked to order. Many restaurants, to suit all tastes and budgets, are within a couple of blocks walking distance and particularly in the Knysna Quays and Main Street areas.

Lots of wood going on here - and a train theme also. Rooms are on either ground or upper level and there is a pool and sunbathing area with trees/plants etc at the centre of the smallish complex. very easy to walk down to the waterside and also easy to walk to the main street which had the tourist info office - and lots of other restaurants etc

The outside of this hotel looks like a wooden fort - quite impressive. The rooms inside however were not the greatest. Our room smelt quite damp, and sadly being encased in wood you can hear everything. If you wish to stay here I would suggest that you book a room upstair and not downstairs, and certainly not rooms 43 to 50 as they sit under the breakfast room. So you will be woken up at circa 5.45 am as we were by the footsteps of the staff preparing the buffet.
Situation-wise however the hotel is handy to the main shopping street and also to the waterfront with some lovely restaurants, bars, and boat tours.
Helen