I stayed in this hotel in June, 2002, because the Hostal Alvarez Quintero, right up the street, was full. If you are in this price range, the hotel, in a perfect location, is very comfortable, with all the amenities. Air-conditoning is nice, but not really necessary as you are on the Atlantic coast.
I have been to Hondarribia five tlmes, and love this tiny, beautiful city. The very tiny old city, up a small hill is interesting, but not a good location to stay. The main city, with just a few steets parallel to a beautiful, long, pedestrian ocean promenade (lined with cafes), is a great place to relax for a few days.
I usually stay at the Hostal Alvarez Quintero, directly across from the Tourist Office, with rooms for $25-$60. While not as fancy, they are very comfortable, and the large lobby/common area is beautifully decorated in the old Spanish style (much more elegant than the above hotel).

This is a simple, well-maintained and well-staffed hotel in a pleasant and busy center of a small fishing town. The rooms are clean, simple and comfortable. There is nothing fancy about this hotel. Nor is there any aspect of being run-down. Parking is close, many little shops, bars and restaurants surround the location and people often stay up late into the wee hours so be prepared for a little late night noise or, better yet, participate yourself!

This city was actually a welcome break from the larger cities we visited. Hondarribia is a little out of the way and has a small community feel to it. Close to the French Border (10 km), San Sebatian (8-12 kilometers), Bilbao (60 km) and the Haro Rioja region (80-90 km), it is a nice place to stay while visiting the much more expensive and touristy areas if you are driving. But it is not as close to San Sebastian - Donostia as Trip Advisor suggests, probably about a 15-20 min drive on average. Hondarribia has an impressive historic wall and loads of charm to recommend itself. Very pleasant.