We stayed there while on a cycling trip. The place is beautifully clean and well run. Damiano at the front desk is especially helpful. He had some great stories about how bad the Sassi area was before it was redeveloped.
The rooms (caves) are large and have both air conditioners and dehumidifiers. Bathrooms are modern and clean.
Walking in the area is difficult but very rewarding. Lots of restaurants, museums and churches. Shopping is also good, and fairly reasonable. There is a good restaurant about 100 meters away. The main town square is about 5 minutes walk with coffee shops, stores, banks and more restaurants.
They serve a great breakfast at the hotel, but no other meals. We bought food in the main square and kept it in the room refrigerators. There are several outside areas at the hotel where you can make sandwitches and enjoy a bottle of local wine.
The lady who owns the place (with her husband) is from the US and can help with questions, especially about shopping. She knows about local shops that we never would have found.
Finding the place is almost impossible unless you just follow the "Sassi" signs when you get into town. My GPS was useless. After you brave the incredibly narrow streets in the Sassi, give the keys to the valet parking man. They put the car up in a lot in the new town about a kilometer away. Its money well spent.

I highly recommend a visit to Matera, and the hotel is indeed a very nice facility. We had a good experience booking and getting settled, but I must admit that I was disappointed that when I spoke to the front desk about how very hot our room was, their only response was, "yes, we know." For 140 euro a night, and the great reviews, I was expecting more. So, if you don't like very warm, stuffy rooms, avoid #17. The family we travelled with had a lovely room that was very comfortable.

We stayed two days in the Locanda and like all the others here we loved it. Everything was just perfect. The best place in Matera. For one night we stayed in downstaires in room no. 3, a lovely spacious room but near the hotel-facilities (air-con, kitchen)… the same with room no. 1 and 2. Just try to get a room with a view. Some even have small terraces.

I’ve been so lucky to stay twice a the Locanda on a business trip. I’ve never been to a place like this before! It’s really special and so full of atmosphere. The staff is so nice and good-humoured. This hotel cannot be described, but has to be experienced! The facilities in the rooms are quite basic, but the rooms carved into the cliff has such a different feel, that you don’t really miss them. Breakfast buffet is quite large and very nice for Italian standards. There are many good restaurants in Sassi. I can only recommend this hotel, you will not be disappointed!