The only place close to St. Michaels we've stayed is at the Hyatt in Cambridge (about 25 minutes away). Quite nice, and we enjoyed our time there very much, but if you're looking for more of an inn/b&b experience, probably not what you want. Still, just in case....
I used to live in Chestertown, many years ago, there is a lovely old hotel in town. Not exactly close to where you intend to be, but perhaps along the way? Its now called the Imperial Hotel: http://www.imperialchestertown.com
I haven't stayed there for at least five years but I recall it was nice at that time.
We stayed at the Harbor Inn in St. Michael's a number of years ago and enjoyed it. It was convenient to restaurants and to the museum and the facilities and grounds were lovely.
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Can you suggest a place to stay in or near St. Michaels, Md.?