The cheap hotels in Hvar are mostly large, bland structures that date from the Tito years. Forget about fetching decor. The good news is that they are very well-located. There's no official youth hostel in Hvar but there is an excellent privately-run hostel, the Hostel Zorana. Don't forget to check out the array of private accommodation in Hvar.
Hotel Sirena offers a lot of quality for a two-star hotel. Each one of the simply furnished rooms has its own balcony to catch the lavender breezes. It's a large enough hotel to encourage socializing but 2km from the centre of Hvar Town if you want a little distance from Hvar's high-season commotion. The hotel also has a swimming pool and a private beach. Find out more.
Dalmacija Hvar Villa Hotel is proof that you don't have to spend a fortune to stay in the centre of town. This perfectly pleasant two-star hotel has a quiet location on a beach just around the corner from the harbour. Find out more.
There are also some private and well-run hostels in Hvar.
All about Hvar in Croatia Traveller's Dalmatia: Split to Dubovnik 2017
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