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They are really cheap because they are located outside the city centre. Sometimes in good areas, sometimes, not. I think that prices start at 25 euros a night which is really cheap. Make sure that you know the area before you book the hotel.
The rooms are larger than phone booths. Many homeless people live in them because they are so cheap.
If you want a cheap but decent sized and clean hotel, try Premiere Classe. It's a large chain, but a step up from Formule 1.