Backpackers have been relaxing in Dali for years, and the city has a wide range of accommodations for budget travelers. A half-hour stroll takes you across town, so location is not an issue, but during summer months you might find yourself hotfooting around town trying to find an available bed. Budget guesthouse services include bike rental, tours and Internet cafes while the few star-rated hotels provide larger rooms and nicer bathrooms.

The best Dali has to offer includes backpacker havens like Jim's Tibetan Guesthouse, Friends Guesthouse, No 3 Guesthouse, MCA Guesthouse, and Old Dali Four Seasons Inn. Find travel advice, meet friends and eat the city's famed banana pancakes at these foreign-friendly inns.

Xiaguan, also known as Dali City (which confuses many travelers), is 18 km (a little over 11 miles) south of Dali. This larger city does not have many attractions but does offer more star-rated accommodation than Dali, such as the four-star Manwan Hotel, the Jinda Hotel and the 3-star Xiaguan Hotel. More hotels line Jianshe Lu, Xiaguan's main drag. For more accommodations in the Dali/Xiaguan area, take a look at our accommodation index below. Check out our comments section to pick up tips from other travelers on where to stay—or let us know about your experience.