I can't remember how I found this hotel with only 2 days to go before I required the booking... but what success!!
I have stayed in quite a few Harz hotels, but this was definitely the best.
We were 2 adults, 2 children (6 & 9). It is difficult to find a hotel where you can sleep 2 children in the same room as you BUT at the Viktoria Luise, Blankenburg we needn't have worried. We were given the suite which consisted of a (very) large double room, single room (for the children), ensuite and a large private balcony.
The best parts were the service, the food (excellent and plenty of it with a daily menu), the wine and the spectacular views over the town plus the fact you could walk for 2 mins directly behind the hotel to fantastic rock scrambling hillside (perfect for the children).
I particularly enjoyed the fact that we could safely put the children to bed and enjoy the rest of our wine and coffee in the hotel's kamine raum (fireplace room/'drawing room') with glowing fire. The decor is lovely - in places art nouveau/deco (I also believe there was a sauna but we ran out of time).

You can walk from the hotel into Blankenburg, to the schloss and surrounding park and woodland plus Regenstein schloss (an amazing castle ruins cave style built into a huge limestone outcrop).

We had two nights at the Viktoria Luise, Blankenburg and I would love to return, this is why I have chosen to recommend it highly to everyone.
The old east Germany has some spectacular towns in this region and the best natural walking areas around.
My only disappointment is that my digital camera is not working otherwise I would have added candid photos to my review - which would have shown how lovely this hotel really is.