Byeyer Hotel, Hualien City  

The Byeyer hotel is in a great location in downtown Hualien. Only a few blocks walk from the nearest night market, you can also walk to the train station in about 15 minutes and the hotel offers free bikes that you can easily ride to the riverside bike track.
The staff are very friendly, although not all of them have a grasp of English (there is one man, Jack, who is fluent in English and can help you out when you need it).
The rooms are a decent size (slightly above average for an East Asian hotel) and there are English channels on offer. A note to Aussies or others from a three-pronged power point country, we didn't have a three-point-of-contact power point in our room, so we couldn't use an adapter for our computers (which was inconvenient as my partner and I were both on a working holiday), but phone chargers and camera chargers should be fine (as they don't often have a third grounding pin).
There was a good variety for breakfast, but mostly Chinese choices (which I like). This was one of the few hotels we stayed in in Taiwan that had 'real' bacon though, so that was a plus!
The hotel can organise tours to the surrounds for you, including to Taroko Gorge. However, it is difficult to find a tour conducted in English, so be willing to ask a friendly English-speaking Singaporean or similar who will hopefully be on the tour with you and can translate the mandarin and let you know when the bus will leave!
We would definitely stay in this hotel again.
FYI. Try the dumpling store next door (maybe two doors down, just passed Domino's Pizza), it is delicious and the staff are wonderfully patient and amused by your pointing at the examples in the display cabinet!