A Place To Stay : 798 International Youth Hostel (青岛798国际青年旅舍）
While we were in Qingdao, my friends and I stayed at the 798 International Youth Hostel and we loved it.
The hostel is in a great downtown location so it's only a short taxi ride from the main train station and key tourist locations (the cathedral, the 5.4 Square etc) are all close-by. The transportation is very convenient - the bus station is just across the road (but be sure to cross the road to take the bus into town. If you get on the bus by the bus stop outside the hotel, you'll head off into the unknown!)
We had a 8-bed room for all of us which worked out at 50RMB per person per night....that's roughly £5!! All the rooms had wi-fi and air con/heating. Even the showers, normally the downfall of most youth hostels, were consistently hot and fairly powerful~ That said, it is a member of the International Youth Hostel Association so it does have a reputation to uphold.
There were security lockers in all the rooms but they weren't too big so try to avoid taking bulky luggage if you do go. That said, since we had our room to ourselves (and all the rooms lock) we just left our things in the room with no problems.
I'd definitely recommend the hostel - the staff were fantastic and really helpful in helping us plan our itinerary.
Reservations can be made via Trip Advisor (English), via Chinese booking sites (Chinese) or by phone (Chinese).
If you have any problems/questions, just leave a comment below and I shall get back to you.
No.121 Ningxia Road, Shinan District, Qingdao 266000, China
0532 80 798 798