Just east of the stunning Cape Otway.
The town of Apollo Bay is a decent place to be located on the Great Ocean Road, or indeed for a stop-off. A sizeable town in this area, it sits just east of the stunning Cape Otway and is very popular with tourists in summer on account of its beautiful bay, although it is quieter than other towns on this famous route.
There are two gorgeous beaches here that are separated by a headland and feature nice sands for sunbathing and moderate surfing. Horseback rides at sunset are a popular pastime, along with kayaking to nearby seal colonies and spotting southern right whales in winter.
It's a pleasant little low-lying town, fronted by lots of parkland before you hit the beach. As the bay arcs round, you are never far from the water and there's a small harbour from where deep sea fishing and whale watching trips can be had. Also expect souvenir shops, galleries and markets, along with cafés and great seafood eats.
Key sights are Marriner's Lookout, which incorporates a short walk, Marriner's Falls, and walking through rainforest to Maits Rest with its boardwalk, glow worms and rare snails. Cape Otway Lightstation is just a short drive from here, through the lush Great Otway National Park.
You can even do a scenic flight to the famed 12 Apostles from Apollo Bay, or take to the hills by mountain bike. More serious walking can be had along the Great Ocean Walk. If you're here in April, be sure to check out the Apollo Bay Music Festival.
While there are lots of backpacker-style places in town, higher quality hotels and apartments also exist. Most are located right on the Great Ocean Road. It's about two and a half hours from Melbourne to Apollo Bay by car and a similar time from Warrnambool when coming from the other direction.