
The budget hotel choices available looked quite dreary until I discovered the Palau Marine Club. They are affiliated with Antelope Divers but I am not a diver.
I stayed in the Clubhouse, scroll down on the above linked Web page, for $25 a night. For that I got an air-conditioned single room with a refrigerator and a view. Plus I got a wonderful sheltered outdoor sitting area downstairs with a Rock Islands view. Free (instant) coffee and cold water is available all day long.
The Marine Club is located in Malakal right next to the boat docks for the Peleliu and Angaur ferries. It is walking distance to two of the rare restaurants with outdoor seating in Palau as well as several others. You can take the restaurant shuttle from the Palau Royal Resort stop each evening to downtown Koror.
The bathrooms are shared and the rooms are a three floor walk-up. (You can see my room in the top photo, it's at the very top in the middle.)


Airport transfers are $10 each way. The staff is wonderful. I stayed with them 10 nights over the course of my Palau visit.