Hotel Castello was full! What's a good second choice???
Did you look through reviews on Tripadvisor? When are you going? We stayed ay Hotel Villa Carmen last time. It is on the lake north of town, but the road separates the hotel from the pebbly beach. Walkable to town. Nice people, nice modern rooms. It is not listed on TA but you can find reviews on other websites. Mthe speak little English but we did fine in German. Next tme we go I am tempted by Prima Luna, if I can figure out the location. We loved Malcescine and would happily return.