Lodging
Our favorite accomodations are either in private homes, small guesthouses, or studio apartments. All three come with different advantages.

While staying in a private home, you'll often find yourself treated like a family member. In Copenhagen, our family invited us to go on a fishing trip with them! A private home we stayed at in Salzburg included a private balcony overlooking the Austrian Alps with quaint, hand painted furniture and a nice breakfast.....all for $33.00 USD (1998).
In Sweden, one of the most expensive countries in Europe, we stayed in a fantastic farmhouse B&B for $55.00 USD. It included a wonderful Swedish breakfast with fresh baked breads, cheese, eggs, and even caviar (Swedish caviar is spread on bread...much like peanut butter!).
There was a coffee maker, along with complementary coffee in the hallway. A simple hotel room in Sweden would easily cost around $150.00 USD. During breakfast, one morning, I was able to inquire about a Stonehenge-like area that I had read about. Built by the Vikings, and not quite as old as stonehenge, our host family gave us driving directions. Unlike Stonehenge, there were no barbed wired fences, and we had the place to ourselves! Ahhh...the joys of traveling off the beaten path!
Here's a picture of the Swedish "Stonehenge"...notice,..no people, and a lovely ocean backdrop!

Guesthouses are a great bargain too. Althought they don't provide you with an experience quite as intimate, you usually have the added convenience of a wine or beer garden on the premises. These on-premise restaurants are usually a great value, they specialize in the local cuisine and offer wines and beers specific to the region. Guesthouses were easy to find in Germany, and ran us between $35 - $45 (2001) USD a night and included a generous breakfast.
When staying in an area for several days (ideally a week or so), we've booked studio apartments. In Vienna, we stayed at a very comfortable, and modern studio for $42.00 USD a night. Although you do miss out on the personal interactions with a host family, you have the added convenience of a kitchen. Not only can this save you money, but it's great fun shopping in the local markets. Find a nearby bakery or cheese shop...visit more then once and they'll greet you back with the warmest hello. Since we had our main meal in the middle of the day (like most Europeans) fixing a light pasta dinner in the evening was a great way to stretch our vacation dollars.
Just like everything else, prices have gone up and due to the US dollar losing value against the Euro there has been a sharp increase in the last few years. Still, you will most likely find this method of travel to be much less then anything packaged or conventional.
For those truly wishing for a local experience there are programs which allow you to visit a guest and reside with a family whose hope is to learn about your culture as well as share there own. Friendship Force is an organization that can help match you to a host family. Servas, is another organization that allows you to arrange home exchanges.
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