I was in Hangzhou for the first time for work some months ago. We were put up in a Chinese hotel (can't recall exact name, had jin <gold> in it) -- on the opposite (west) side of the west lake from all the big name brands. I have to say, it was wonderful. Whilst the 'main drag' of the lake was teeming with tourists, our side was so tranquil and peaceful, it was really magical.

The hotel was like most other 'fancy' Chinese hotels -- lots of fake gold and marble, but it was OK. But the location was superb.

Would definitely second the recommendation to be on the lake itself. Going for early morning/ evening walks are wonderful, and the traffic in HZ is pretty terrible, as is getting a cab in peak hours.

tb