The 5 star, Hotel Bauer has a really ugly modern entrance from the street but has a gorgeous palace frontage on the grand canal with stunning views across the canal to the Santa Maria Della Salute. The terrace is on a corner between a small side canal & the main Grand Canal & it's a fabulous place to stop for coffee & watch the world / buses / gongolas / delivery boats go by.
http://www.bauervenezia.it/iflash.html