Recently refurbished and located in a rather nice, very Scottish greystone Victorian building. Oban's SYHA hostel is the best place to stay in town if you're on any sort of budget – and in a great location, even if you're not. It's got a great seafront perch, looking out over the harbour and the Firth of Lorne, and offers a mixture of multi-bedded rooms and private rooms with en-suite facilities – some in the original main building and some in a more modern extension at the back.
It's a friendly place, with plenty of staff on hand to advise on what to do in the surrounding area – and there is lots, not just the town itself but also the nearby isles of Kerrera and Linsmore, and the knobbly finger of Loch Awe, the longest stretch of freshwater in the country. The youth hostel serves good food, with great cooked breakfasts, lunches and dinners served in its Raasay dining room, and there's a comfy lounge to loll about in, with great views over the water. Recommended.
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