Hotels in Istanbul and throughout Turkey cover the full range of lodgings, from luxury palace hotels through charming, historic inns to simple but clean and cheappensions and hostels, and even rental villas and flats/ apartments.
Most Turkish hotels offer rooms with private bathrooms, and include breakfast in the rates. (Here's a Turkish Hotel Room Users' Guide.) Below are descriptions of the ratings by the national Ministry of Tourism, and my (rough) price estimates for double (two-person) rooms:
Special-Class Hotels & Inns
Luckily for us visitors, Turkey has hundreds of special places to stay that don't fit easily into the star categories: Ottoman mansion inns, historic houses, boutique hotels, Cappadocian cave dwellings, etc. These often have lots of character, at least some modern comforts (and sometimes all comforts), and are priced accordingly, anywhere from TL100 to TL400+double.
Expected luxury and all services at TL300 to 600+. Worldwide chains (Hilton, Kempinski, Marriott, Ritz Carlton, Sheraton, etc) tend to be smoother but substantially more expensive than the local Turkish chains (Dedeman, Divan, Merit, etc), which offer a bit less class but better value. Breakfast is definitely not included in the normal rates (although it may be in package deals), and costs an amazing TL40+ extra in many cases.
Comfortable, with satellite TV, minibars, perhaps even a swimming pool or nightclub in smaller cities and resorts for TL95-135.
Great value for the budget-minded; simple, homey, often like a European pension. Not a lot of services, though usually Wifi Internet, TV in the lounge, clean rooms with (tiny) private shower, and usually a simple breakfast for TL50-85.
The smallest, cheapest (TL30-65), simplest local hotels, hostels and pensions may be rated by the municipal authorities. These spartan places in out-of-the-way, off-the-beaten-track small towns and eastern cities often have rooms with only beds and a light bulb; a communal cold-water sink and shower are down the hall; a hot shower (if available) costs extra. No breakfast available. If you're traveling on a starvation budget, they're good. No-star places in a city may be funky or grim; in seaside resorts they're often friendly and convenient.
Turkey has numerous excellent travelers' hostels of the new type: not the spartan, puritan youth and hikers' barracks of the past but comfortable, congenial, low-cost, high-enjoyment lodgings targeted at adventurous travelers of all ages, but primarily younger ones. The many services usually include Wifi Internet access, bars and lounges, travel-booking services, and may include private rooms with bath. More...
Villas & Flats/Apartments
Perhaps the fastest-growing lodging possibility, villas are springing up all along the Aegean and Mediterranean coasts, and flats/apartments are being refurbished in the major cities for families, small groups, and those coming for visits longer than the normal few days. Examples.
Yes, you can spend part of your holiday/vacation on an organic farm in Turkey. More...