Stayed here for three nights at the end of a small group tour of Mexico. The hotel is located at the junction of two busy streets and within a couple of blocks of the Zocalo and lots of reasonably priced restaurants - including one literally across the road from the main entrance. Several local bars have a 5-7 happy hour. There is a small supermarket at the next junction.
At first, we were a bit disappointed in our room, because the only window opened on to a corridor. However, that was a blessing in disguise, because, unlike most of the rest of our group, we didn't suffer any street noise. The room was on the third floor, so likewise we didn't hear the noises from reception that other reviewers mentioned. The room was basic but clean and adequate and after all we only slept and showered there!.
The reception staff were friendly and helpful and there is free in-room wi-fi. The hotel's restaurant was excellent for breakfast - 74 pesos for a buffet with a good variety of hot and cold foods As mentioned by others, the pool was small, but there's a very pleasant roof terrace and we'd grab a beer from the supermarket and sit up there to watch the sun set before getting ready to go out for a meal.
We left Merida by coach and the coach station is a 10 minute taxi ride (40 pesos) away.

The hotel was an excellent budget choice. Great location, quiet, clean rooms. Nothing plush about it but nor is the price. The only thing i would say is that the photos make it look "shinier" and newer than it is. The photos are all genuine but just not as "shiney" as advertised.

The pool is there but is tiny and there is a lovely roof garden where a group of us had dinner one night...

This hotel was a major disappointment. The only reason it doesn't get a one star is because the facilities are decent. Our room reeked of mustiness, another friend's room stank of cigarette smoke. We needed to keep the air conditioner on all night so the smell didn't overpower us! You cannot sleep as both staff and guests are yelling, whistling and banging items. Twice we had our door knocked on early in the morning by staff who confused us with another room. Very poor indeed.

We have vacationed in Merida for several years. We have stayed at the Luz en Yucatan, the Caribe, and the Dolres Alba. They are all really nice, but the Colonial is the best of all. We have never been disappointed. The staff is really great and Jorge, the manager is exceptional. Happy, friendly, and always willing to help with whatever you may need help with. He sets the precedent for his staff to follow - and they do. The rooms are nicely decorated, clean and comfortable. Last year they remodeled the roof top into a great place to watch the sunset. The hotel is located near everything, the shops, the entertainment, the cathedral, but far enough away (two blocks from the Historic Central Square) to be quiet. You can catch a bus to send a day at the beach in Progresso, or at the ruins at Dzibilchaltún, just a short walk from the hotel. The hotel restaurant is the best place for breakfast in Merida! The buffet is excellent. Miguel supervises the waiters and Pedro, the Eggsman, makes excellent omelets to order, and Fancisco keeps the entrees delicious. There is a travel agency in the lobby to help with travel or tour needs. We love the Colonial, and its people, and recommend it highly!