A real find!
Not many people seem to know about Casa del Tio Dach, but this hostel/B&B is an absolute wonder.
Filled with antiques and original art, with common areas that seem more like a museum (albeit a comfortable one) than a hostel, this is an ideal place to stay. The facilities are sparkling clean, and every last thing has been thought of. They even serve a free breakfast that included fresh fruit and coffee cake.
It is located just four blocks from the Zocalo (center of downtown) and the owner, Edwin, knows absolutely everything about the attractions, history and culture of Merida and the Yucatan in general. Prices were astounding - 130 pesos per person for a two-bed dorm with ensuite bathroom (spacious). I wholeheartedly recommend this hostel.