Calao Inn is an old nice house in a good position that was probably restored about fifteen years ago with a poor taste and as cheaply as possible, than it was abandoned to its destiny, and so it feels.
Rooms are fairly large but dirty. Linens are good quality but stinky and dirty looking. Bed spreads haven’t been washed for a long long time. Mattresses smell urine. Curtains live their own lives.
Bathrooms are just dirty and more hospitable to large insects and pests than to humans.
The restaurant closed down some time ago (so should the Hotel if the owners’ greed was not so big).
Breakfast is cheap, served on tablecloth covered with plastic. In plastic is also served the yogurt sometimes with a bit of mould.
The poor staffs seem recruited on the street just for the day: nobody knows anything; they clean the floor and serve food at the same time. In Laos hiring good staff is very inexpensive, people are usually very kind and helpful, but the staffs at Calao Inn look lost. They do not speak any other language than Lao –other than a rude man that comes in the morning to cash the bills- and they have no idea of their job.
Prices are out of market both for the room and for the service. Some of the nicest places in town cost less (ex. The Apsara, a hip hotel just two minutes walk); and a clean and nicely restored guesthouse cost one third! (Luang Prabang is full of newly restored hotels and guesthouses that meet all the demand for rooms). We booked because we were arriving late at night and we did not feel to search around, but if you cannot book anything online or on the phone, it is worth it to come and look around: accommodations are very abundant and affordable.

We stayed at the le Calao for four nights in January, 2005. The view
from our upstairs room overlooking the Mekong River was great.
The Inn is in a quiet neighborhood about a half mile from "downtown"
Luang Prabang. The staff is friendly and helpful and the food is good
too.

We spent our first night in this dreamlike city at the Le Calao Inn. Great views from the balconies in the upstairs rooms. Friendly staff (to be fair, everyone is friendly in Laos!), probably overpriced, though a great way to start a trip.