Hostal Marissal was THE highlight of our trip, from an accommodation standpoint. The location was absolutely perfect, the staff was friendly, the room was spotless, and the price was unbeatable. I can't say enough praises about our stay.
The Hostal is located right on the Balcony of Europe in the center of town, just yards from the beach. Getting to the hotel by car is a bit tricky, my suggestion is to park in the underground garage nearby. Check in is located through the cafe/restaurant.
The room we had was on the second floor (the third floor to us Americans) and had a nice little balcony, though the trees blocked a true view of the Mediterranean. Our room had a very comfortable double bed, a bath, built in hairdryer, TV, phone and all the basic amenities, and was very quiet.
The hotel is located directly next door to the Hotel Balcon de Europa, and is about half the price. Hostal Marissal lacks its own private beach area, but it is just a 3-minute walk downhill to the public beach area. And the 50-euro price (mid-season) can't be beat. (60 euros in high season and 40 euros in low season - 2004 rates).
I ended up coming down with a case of 24 hour stomach flu while in Nerja, so I spent more time than usual in the hotel. In some of the hotels we stayed at, it would have been a nightmare due to loud neighbors or dingy rooms. In this case, I was able to sleep during odd hours with no loud noises from the hall, and found the Spanish TV stations very entertaining.