Hotel Raya

A long-standing Panarea institution, this honeycomb of white adobe-walled rooms tucked up against a volcanic hillside abounds in seductive details: picture-perfect terraces looking out to Stromboli, a jacuzzi filled with mineral water from Panarea's natural hot springs and a summertime disco. On the downside, prices are among Panarea's highest, and customer service doesn't always live up to the stunning setting.