We stayed for 3 nights and have only good things to say about the Hotel Grotta.
It's located up a hill (accessible via sidewalk-less road or up/down an undeveloped area of land on a footpath) from Naxos town, so you are not in the middle of the cacaphony or busyness of the port. It's location provides you with a marvelous view - the town, the arch, the water, the sunset. Also, I was able to walk into the kastro area very easily from the hotel. After its location, what's wonderful about Grotta is the family running it - they are friendly, efficient, helpful and seem to enjoy their hosting of all sorts of people and needs. The room was simple but clean and comfortable. But the view from our oceanside balcony was wonderful. The swimming pool and jacuzzi are indoors but accessible from a protected courtyard. Oh, the breakfast buffets are scaringly bursting with fresh, local, seasonable fruit, breads, cereals, cheeses and then at least 7 different sweet cakes, pies and bakery stuff. At Grotta, not only do you enjoy Naxos, yourself, but you also start feeling a part of the family and quite at home. If we do Naxos again, we'd definately stay at the Grotta again.

My wife and I stayed at the Grotta for four delightful nights in October. Never have I seen a hotel staff hard work harder for their guests comfort than at the Hotel Grotta. While the Grotta is a modest (2 start by European rating) establishment it is quite lovely and I would absolutely stay there again. As has been said many times, their breakfast is unbelievable and we've paid more for breakfast than we paid for the room with the unbelievable breakfast at the Hotel Grotta. It is a family affair at the Grotta, Dmitrius runs the establishment while is mother tends the bar, his sister manages the breakfast and room cleaning and his father pitches in to shuttle guests to and from the ferry and what not.

Once we got a choice room on with a patio (room 36) facing the sunset and the Porta (the ancient doorway of the ruin of the Temple of Apollo) I thought that I should over-winter in Naxos. Unfortunately, reality intervened and my wife dragged me off to Athens to continue our planned vacation.

If you go to Naxos and do not intend to just hang out at the beach, then I would highly recommend the Grotta as your hotel. While there is a small beach just a few minute walk away, it is exposed to the North so it could become rough unless the wind is right. We rented a car and parked it right out front so that we could more fully explore the island. There is a lot to see and the driving is an adventure.

Cheers.

My husband I stayed at Grotta Hotel for four nights this past September and fell in love with this hotel !!!! It is run by a family and has a wonderful family-feel. They made us feel right at home, picked us up from the ferry dock, and gave us ideas on the best things to do and see on the island of Naxos. The breakfast was a bounty of yummy foods that started the day off right. The room was comfortable and clean and the bathroom was larger than many of the other places we stayed in Greece. We requested one of the sea-view rooms, which I highly recommend. Of all the the places we stayed in our month-long vacation in Greece, this was my favorite hotel of them all !!!! The price was right, too!!!! The total package !!!

Hotel Grotta is on a headland just outside town and offers wonderful views of town and sea and sunset that we and many visitors said was better than the Santorini experience. Pleasant, pretty rooms all (it seemed) have some outside space - a balcony or small patio, and it is only 10 minute walk into town. Plunge pool and hot tub, free wifi in the restaurant/lounge, endearingly sweet owners, comfortable bed in a calm and quiet environment, and a bargain. PERFECT (And Naxos is great too)