We are a family of four and can manage with two hotel rooms but our children (22 and 20) would certainly prefer their own rooms. Three hotel rooms can be prohibitive, however, so we often stay in AirBnBs. In Chania, they are all ~15-20 minutes outside of town. We'll have a rental car or can take taxis. Planning on day trips from Chania. Is it a mistake not to stay in town?
I think you would be disappointed if you did not stay in Chania old town harbour area within the city walls. You can easily imagine you have stepped back in time in the old town.
Just google VRBO or air Bnb and you can find something that suits your needs.
Here is why I recommend staying in the old town.
Chania 2024 https://www.flickr.com/photos/stanbr54/albums/72177720318408008/