The Aeolian Island of Panarea is home to one of the most idyllic and certainly one of our favourite hotels in the Mediterranean.

The Raya overlooks the crystal-clear emerald sea with a spectacular view of the active volcano of Stromboli. Originally a dirt-poor fishing village, Panarea is one of the few Aeolian Islands that has successfully managed to transform itself into a chic and stylish retreat that is overtaken by glamorous young Italians every summer.  Just a short walk from the port (be prepared for all the steps!), the hotel sits snugly on the hillside and is split into three separate sections: Raya Alto, Raya Basso and Raya Peppe Maria. If you imagine a pyramid, we suggest you aim for Raya Alto which is located at the highest point.

All the simple, whitewashed bedrooms have private terraces overlooking the sea. Bathrooms are built around naturally occurring boulders and you may eencounter the odd antique or huge sea-shell, but overall it is the staggering scenery that provides the style.

Cars are banned on the island as are large hotels and buildings. Dinner on the terrace lit only by oil lamps is a magical experience with the volcano on Stromboli erupting like the glowing tip of a giant cigar in the distance.

The Raya is the perfect place for those looking for a chilled and understated chic-retreat, but not for those wanting 24-hour room service and a pool.