In the last roadside village (Chã de Manuel dos Santos) up the valley road from Vila das Pombas is this adorable Spanish-run option housed in an orange building nestled on a hillside, with four spruced-up doubles with private bathrooms, pine floors and hot water. There's a terrace with dazzling valley views and deck chairs, a snack bar and free wi-fi.
There are great hikes right outside the door, and the owner has great tips for exploring the island.