Hi,
@jennysa, I am not surprised to hear about the crowds. Pasting in a post of mine from a few years ago. Good luck and let us know what you decide! Buen camino, Laurie
Just a follow-up to say that I was able to find the little hostal whose name I couldn't remember, so I stayed there. Very cheap and clean, I think my single was 20 or maybe 25.
Hostal Alba, tel. 982 22 60 56
When you walk through the walls, take your first left. It's on that street. The hotel's address is Prazo do Campo Castelo, 31. I had a rear facing room (the front of the building faces onto a street with a fair amount happening, so if you are noise-averse, ask for a rear room). The rear rooms are nice because they don't face into an air shaft, but actually outside, and the walls are a stone's throw away. It's about a 3 minute walk from the municipal albergue.
There are also two albergue alternatives to the municipal. One is Albergue Lug2,
http://www.lugdous.com, outside the walls but not far from the bridge where the Camino leaves Lugo. The other is right at the bridge, Roots and Boots,
http://www.rootsandbootslugo.es/en/. Neither one is restricted to pilgrims, so you might get a louder, more nightlife-loving crowd. I know people who stayed in both this year and had no complaints. Roots and Boots also has a big cafe below and it was open when we left town around 7.