Herceg Novi sits at the entrance to the Bay of Kotor, just a few kilometres from the Croatian border. It's the first town you'll reach coming from Dubrovnik, and it makes for a pleasant introduction to Montenegro — less touristed than Kotor, more authentic than Budva.
The old town climbs steeply up the hillside, with a mix of architectural layers reflecting centuries of different rulers: the Kanli Kula (Bloody Tower) fortress at the top, the Sahat Kula (Clock Tower) in the main square, Ottoman mosques, and a baroque seafront. The Forte Mare castle sits right on the water. There are good views of the bay from the upper town.
Herceg Novi has a reputation among Montenegrins for its mild climate — mimosas bloom in winter, and it's noticeably warmer than inland areas. The Pet Danica promenade runs along the seafront below the old town, with restaurants and cafes that get lively on summer evenings.
The town is a good base for exploring the northern part of the bay, and a starting point for the ferry shortcut across the bay to Lepetane (saving the long drive around). It's about 40km by road to Kotor, or 15 minutes by ferry across the narrowest part of the bay.