Herceg Novi, although not the most spectacular city in Montenegro (Kotor takes that prize), Herceg Novi is probably the most pleasant and warrants a several day visit. The city is particularly a good alternative to the very touristy Dubrovnik in Croatia. The cities have similar architecture but Herceg Novi not being as grand (nor as touristy and expensive). Herceg Novi translates to English as "New Castle".
During the last few years Herceg Novi has become a very popular destination for tourists from the neighboring Serbia, and, to a lesser extent from Russia. In spite of this tourist boom, the city has managed to some extent to keep the traditional slow Montenegrin lifestyle. The locals are very welcoming and you are never annoyed by street vendors.
A sizeable Bosnian (Serb) refugee population flooded into Herceg Novi during the war years. Many of the camps are still around although they have been turned into more permanent (and quite nice) settlements. You can still see them on the bus as you leave the city. Also if you go for a wander up into the hills you will come into whole new areas of construction resulting from the recent property boom.
The Financial Times in 2007 listed Montenegro as one of world's 10 top property hotspots and foreign buyers have been snapping up properties on the coast.
Bus is the only form of public transport in/out of Herceg Novi, and the bus station (located in the centre of town) is busy the day long with buses heading (mostly) down the Adriatic coast. There is a regular bus service to Herceg Novi (and further to other Montenegrin cities) from main bus station in Dubrovnik, which runs several times a day. It costs about 9 Euro and takes about one hour. There are also quite regular busses to Kotor, Budva, Bar and Podgorica.
If Herceg Novi is your main destination, a pleasant alternative to bus travel is hiring a Croat cab from Dubrovnik airport (Cilipi) for about €35-50; this trip takes about 40 minutes, including border crossings.
There is NO rail or ferry access into the town.
Italian-made clothes in Old Town and Igalo boutiques are reasonably priced up-to-minute fashions. Not great for local arts and crafts, which are available in Kotor and Budva. Go to local market just off the main square in the Old Town on Saturday morning to buy fresh fruit (sweet and cheap), olive oil, sheep and goats cheese, dried figs, locally made wine; note that this market sells seasonal and locally produced goods, so what you find depends on the time of your visit.
Go to small eateries around the promenade for fresh local food, grilled seafood and meat dishes, and international cuisine. Count approximately 10-12 euro for the main dish in a typical restaurant (grilled high-quality fish is more expensive). Almost all cafes serve pizza which is usually well-made. Follow the locals; Montenegrins are usually more picky than foreign tourists when it comes to eating out.
The Petica in the centre of the Old Town is a great place to sit, drink an espresso, or have some fairly priced pasta/pizza. 4-7E. The service is very friendly and the food is delicious.
The Tre Lipe restaurant is conveniently located next to the Sea Fort (Forte Mare), 20 meters from the beach. You eat in an open-air terasse under three old lindens, and the service is quick and friendly.
Herceg Novi is hot in summer, and it usually stays warm late into the evenings, so cold drinks are best sellers. Iced coffee is served in tall glasses with dolops of ice cream and "slag" (fatty whipped cream) and qualifies as a full meal. Local beer made in Niksic is good; also try "spritzer" which is a refreshing mix of chilled white wine and carbonated mineral water.
Accommodation is plentiful, look for signs that say 'soba.' You should be able to get a room for 10 EUR per person during the summer months.
Half-day or full-day boat excursions along the Kotor bay or to a specific destination (Kotor, Perast, Ostrog monastery) leave from different points on the beach.