Dubrovnik deserves its reputation as a hot city for cultural travelers. It’s small, beautiful, and very historic, and if it were easier to reach it might just be overwhelmed by visitors.
Still, this city is a relative bargain by European standards and compared to similar cities in Italy, but it’s not as cheap as it was not long ago, and it looks to only get more expensive as word gets out.
Hotels right in the Old City area can charge high rates and stay busy at least all summer, so the only way to find a bargain is to look a bit outside the center. The only hostel in the Old City is twice the price of some of the others.
Fortunately the main attractions are reasonably priced, and there’s plenty of free and cheap things to do, so once you have a room you are doing okay. Food and drinks can be pricey in the Old City as well, but some cheaper items are around if you look.