Dahab is the Sinai's laid-back antidote to the package-tour glitz of Sharm el Sheikh. Named after the Arabic word for gold, this former Bedouin fishing village sits on the Gulf of Aqaba with desert mountains at its back and some of the Red Sea's best diving just offshore. Backpackers discovered it in the 1980s, and the vibe has never fully shaken that easygoing DNA, even as proper restaurants and dive centers have moved in.
The town stretches along the coast in two main parts. Assalah, the old Bedouin village, is where you will find budget camps, cafes with floor cushions, and the unmistakable smell of shisha. Masbat Bay, the tourist waterfront, runs south along a pedestrian promenade lined with restaurants and dive shops, all facing the sea. There is no real separation between the two -- you walk from one to the other in fifteen minutes.
What makes Dahab special is the combination of world-class reef diving with a small-town feel and genuinely low prices. The Blue Hole, one of the most famous (and most dangerous) dive sites on earth, is a short drive north. But even snorkeling off the Lighthouse reef right in town reveals a dazzling underwater world. When you are done in the water, the desert is right there -- camel treks, jeep safaris to the Colored Canyon, and sunrise hikes up Mount Sinai are all easy day trips.
Dahab is not a party town in the Ibiza sense, but it is not sleepy either. Beachfront bars stay open late, there is usually live music somewhere, and the international crowd keeps things interesting. The food punches above its weight, with good seafood, Egyptian home cooking, and a surprising number of decent international kitchens. It is one of the cheapest destinations on the Red Sea, and one of the most rewarding.