Miyoshiya is a simple travellers' ryokan from the 1940s, and the knowledgeable English-speaking owner makes a stay here worth it. Most of the Japanese-style rooms have shared facilities and there's a stone common bath. It's a three-minute walk from Kii-Tanabe Station (turn left at the first traffic signal, walk about 300m and it will be on your right).
There are coin laundry facilities; breakfast costs an extra ¥800.