We (=4 persons, 2 double rooms) stayed for one night at the Hotel Colonial in February 2007. I would judge the overall quality of the hotel as pretty average.
The main problem we had, was with the reservation process. We booked our rooms for two nights on what we thought was the hotel homepage (--) and promptly got a confirmation. Two weeks before our stay at the hotel we tried to cancel the first night by writing several e-mails (in english and spanish) to the hotel e-mail address (reservasAThotelcolonial.com.mx) given on the confirmation. We did not get any response. Finally we sent a fax to the number given on the confirmation (in spanish) and did also not get any response.
When we arrived at the hotel we realized that they had already charged a 'no-show' fee for the first night (the night we had thought we had cancelled) on our credit card. We showed them the fax and e-mails we had sent to cancel the first night and the lady at the reception agreed that we would not have to pay for the second night.
The next day at check-out the situation was different. The guy at the reception told us that we would have to pay for both nights, because we did not reserve our rooms directly with the hotel but instead through an organization called globres.com. He argued that we should have cancelled the reservation through globres.com. He also claimed to not have received any e-mails or faxes, although the homepage, e-mail adress and fax number we used for reservation an cancellation are shown on the hotel business card.
After arguing for 45 minutes (in spanish) we had to give up and paid for the second night which cost us additional USD 100,-.
On the confirmation of your reservation you will not find any hint or contact information to globres.com, only the hotel adress, homepage, phone & fax number and e-mail address are shown. Up to now we do not what precisely globres.com is.
I would not go as far as to claim that this is some systematic method of fraud, but we had the feeling that at the hotel they used this as a welcome opportunity to make some more money.

So if you plan to stay at this hotel be aware that it may not be possible to modify or cancel an internet reservation. You cannot cancel or modify the reservation on the hotel homepage and you are likely to not get any response to e-mails or faxes sent to the hotel.

We have stayed 3 nights in this hotel in Merida and our feedbacks are balanced. The hotel is constructed in the colonial style. The rooms are clean and conformatble but if you see in details, many little thing are damaged or altered by the time. It must have been a great place in the past. The main posistive points are: clean and spacious rooms, very close situation to the zocalo, big breakfast buffet and tasty included in the price.
What we disliked : the reception wich is not quite receptive (we have asked 2 days to have hot water !), the travel agency( not sympatic and not english speaking), the swimming pool: no way to swim in !

Good hotel centered very near the zocalo and opposite the Guayabera shops. Room was clean and the bathroom was very recently renovated.

Nice atmosphere and the breakfast buffet at 59 pesos is very good - all you can eat and comprises hot food and fruit, yogurt and cakes.

Pool is beside the bar and it is little more than a small pond.

We stay there in June. It was ok, near the centre. The room were large and clean, but the air conditioning was old and noisy. You'll probably need it, when we were there the temperature was 40° Celsius with high umidity. The staff wasn't very helpful and friendly. The breakfast buffet was good and various.