The small, bustling town of Ardara has long been welcoming tourists on the coast of County Donegal, and for decades its attractions have been as predictable as they have been reliable: a lovely dogleg of a high street, with an indecent number of pubs (and a supply of good musicians in them) and swift access to some of the most dramatic beaches and coastline in the British Isles. But a boutique hotel? Well, after the Spar minimarket started stocking fancy goods – garlic and the like – it was only a matter of time.

O'Fabulous isn't quite as kitsch as its name, thankfully. It opened just over a year ago in a terraced 19th-century townhouse on the main street. The property had lain empty for 11 years, before developers Amanda Swanwick-Aharoni and Brendan Kirwan got hold of it. But it's another Amanda, the manager, who looks after you, and she does so grandly (we were welcomed with home-made buns and tea). And she's a busy woman: O'Fabulous attracts not just weekenders from Dublin and Belfast but also plenty of locals to its small, elegant dining room.

The menu is impeccably sourced: colcannon soup, warm Clonakilty black pudding salad, navarin of Donegal lamb, for instance. But as I didn't eat an evening meal there, you'll have to take my word on the quality by the breakfast alone: porridge with Donegal honey, whiskey or cream, followed by a "full Irish", with local sausages, bacon, and black-and-white pudding, all of it a treat.

To look at Ardara, you'd think you'd be done with the place in half an hour. But it's worth a gander. John Molloy's still runs an old wooden loom, and stocks an impressive range of tweed jackets, woollen blankets, scarves and caps. There are half-a-dozen pubs, Nancy's Bar probably being the pick.

To burn off the stout, rent a bicycle at Donal Byrne's Bike Hire and cycle down Loughros Point: the views of the estuary and high moorland to the south, and of the Bluestack Mountains to the east, are well worth the pain.

Maghera beach, the epic white sands across the estuary, is a 10-minute drive from Ardara – though think of it as a venue for a bracing stroll rather than a leisurely dip, since the currents can be treacherous.

LOCATION

O'Fabulous, Irish Habitué, Front Street, Ardara, Co Donegal, Ireland (00 353 74 953 7791; www.ofabulous.com). The parking on Front Street is tight – but a new car park has opened a stone's throw from O'Fabulous.

Time from nearest airport: Derry in Northern Ireland is around 90 minutes by car. If you're hiring a car there, tell the agent that you'll be crossing over the border into Eire so you can organise the appropriate insurance.

COMFORTABLE?

The interior designer of the two developers, Amanda Swanwick-Aharoni, has not been afraid to import a chunk of Montmartre to Ardara: the walls, the windows and the furniture of each of the five bedrooms drip with brocade curtains, bold-print wallpaper and rich, patterned textures, all in striking colours. The signature flourish is the quotations from English and Irish literature written in calligraphy on doors and across walls – it's a hoot.

Somehow the house's original features – the tiled hall floor, the parquetry in the lounge, the fireplaces and mouldings – manage to catch the eye, too. The luxurious details have been attended to: your flop for the night isn't just any bed, but something called a Cloud Bed (it's very comfortable), the tea is Fortnum & Mason and the china is Vera Wang for Wedgwood.

Freebies: Jo Malone toiletries litter the bathroom.

Keeping in touch: There's a phone in each room and if you have to plug in to the 21st century, a flatscreen television and Wi-Fi, too.

THE BOTTOM LINE

Doubles start at €110 (£92) per night, including breakfast. The Swanwick room starts at €175 (£146) per night.

I'm not paying that: Three-star Woodhill House (00 353 74 954 1112; www.woodhillhouse.com) is a family-run hotel in an elegant Victorian house on the outskirts of Ardara. Doubles start at €96 (£80), including breakfast.

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