Where to stay in Flåm (Flam), Norway is a question that can only be answered with a sense of ambivalence. Because Flåm (you say 'Flohhm' not 'Flaehm') exerts a rather captivating allure on the average visitor and finds its place on most (American) itineraries. This is both just and unjust.
Just, because Flåm boasts a terminus for a cul-de-sac train journey, a uniqueness within the Norwegian fjord landscape. One can experience a significant elevation difference by train from Myrdal station at 867m to Flåm at sea level, an experience inherently remarkable.
Yet, unjust, for Flåm itself has evolved into a tourist hotspot, replete with ubiquitous sportswear shops, over-crowded terraces, and restaurants offering mediocre dishes at substantial prices. The parking lots are dotted with tour buses, and, with a stroke of misfortune, three or more colossal cruise ships may be moored, obscuring the view and diffusing a scent of burnt bunker fuel through the valley. Moreover, I can imagine more charming fjord villages.
Therefore, I advise against overnighting there, at least not within Flåm itself. For after the legendary train ride and an hour of nosing around, the village exhausts its novelty. Therefore, allow me to recommend a few lodgings in close proximity, possessing unique character and, importantly, unburdened by hordes of tourists.
29|2 Aurland is a small-scale boutique hotel, family-run, and strategically positioned. Nestled in an elongated valley with a deep blue river and stunning steep slopes, it's a mere fifteen-minute drive from Flåm. The hotel boasts an incredibly tasteful décor, marked by meticulous attention to detail. The hospitality extends to guests with a sense that each arrival is the first. Culinary offerings are nothing short of artistry, with beautifully presented dishes featuring fresh, top-tier ingredients. If you possess a musical talent, feel free to inquire about playing a piece by Chopin on the grand piano gracing the communal dining hall. And beware, due to limited availability, rooms have a tendency to sell out long in advance and for good reason.
In a wholly different category lies the Lindstrøm Hotel in Lærdal. The wondrous blend of tradition and modernity bestows upon the hotel a uniquely captivating character. The breakfast is sumptuous and outstanding. However, the reason for singling out this establishment lies primarily in its location. Lærdalsøyri is a beautiful small former trading post with roots deeply embedded in the medieval era. The charming sight of wooden houses along Øyragata sparks the imagination, standing in stark contrast to the moored cruiseships in Flåm.
For those seeking more privacy, eschewing the standard hotel routine, I present an excellent recommendation—a remarkable 'treehouse' named the Raven Nest, inspired by traditional stave church architecture. Sleep amidst the treetops, equipped with all comforts. Breakfast arrives in a box, crafted by a local caterer, featuring locally sourced and exceptionally high-quality ingredients. Utterly romantic.
Overall, I would advise you to book a fjord cruise that includes Nærøyfjorden and the Stegastein lookout. In that sense one covers the most exceptional highlights of the area. And I speak from first-hand experience!