We are driving with our family from Colfosco in Corvara (Dolomites) to Urbania(Marche). We are looking for a good hotel or b&b for an overnight stay to break up the 7 hour drive. Ideally a place in a picturesque, small town which will be a good spot to explore a bit, have a nice dinner, and then easily get back on the road the next morning.We are a family of 5 (three kids ages 8,13,15). Budget max. $500US/nt. Thanks in advance for any ideas.

I think your best options would be Trento, somewhere on Lake Garda (maybe Malcesine), or Mantova. Trento is really a small city rather than a town. Malcesine is small and very cute, but rather touristy. Mantova is a medium-sized town. All are attractive, and all have good restaurants. On Lake Garda, we stayed in Pai, which is very small, just a wide spot on the road. We stayed at the B&B La Dimora, which was in a lovely spot overlooking the lake. Our room was actually a mini-apartment, with a kitchen area. The B&B has a pool, which might please your kids. It costs way less than your budget. In fact, I think it would be hard to find anything in the €500 per night range in this area. We ate in a restaurant on the lake, in Torri del Benaco, just south of Pai. It was recommended by the owners of our B&B, and we liked it so much we ate there every night. I don't remember the name.

By the way, I live fairly near Urbania.

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If you'd like something a little smaller than Trento, look at Rovereto. It has an interesting WWI museum and a couple of other sights (2nd largest swinging bell after Cologne Cathedral!). We stayed at the Hotel Rovereto and ate one night in the hotel's restaurant which is/was very popular with locals.

I like the drive along the eastern shore of Lake Garda, but it would add miles and time, especially if your trip is in high season summer traffic. If you did take this route, see if you have time to take the cable car from Malcesine to the top of Mt. Baldo.

If you want something closer to halfway on this western route, look at Mantova/Mantua.

Another option is the eastern route from Corvara via Belluno. Since I really dislike the A22, this is probably the way I would go. Halfway would be Padova/Padua, but I'd press on to Ferrara. If you had time on the second day, you could detour to see the amazing mosaics at Ravenna.