Jenny is in Mahdia at the moment but will be back next month so she may have some ideas. I know she and Frank always stay at the Vincci Nour Palace, which certainly isn't cheap, but as they spend six months there every year they do know the area quite well.

If self-catering is of any interest then take a look at these.

http://www.ownersdirect.co.uk/tunisia/TU1.htm

You could try Findmeaccomm.com

- they have really good prices for hotels there, and they act as agents for Medhotels ...so you will probably find that you are booked with them (but cheaper than direct with their site !). They use the Vicci Nour - we stayed there a couple of years ago (nice , clean place...have done a review on HT)