There are three areas to stay in Safaga. The old town has a handful of older, diver-oriented hotels. These are basic and relatively cheap, but for the most part lack beach facilities. Just to the north of town there is a line of older resort-style hotels, some of which have been spiffed up a bit in the last few years but are all still a bit musty and overpriced. Finally there is the Soma Bay compound a few kilometers farther north, which is more expensive, a lot nicer and, given that you can probably get a good package rate through your travel agent, better overall value for your fun-in-the-sun money.
Note: This information was accurate when it was published, but can change without notice. Please be sure to confirm all rates and details directly with the companies in question before planning your trip.