I stayed at Las Arecas for just one night, having chosen Merida over Mexico City for an overnight flight layover. It was a Saturday night and Las Arecas was well located for exploring the churches in the centro area and the activity in the various park areas.

I've pasted a few paragraphs below from my travelogue which is linked with photos here:
http://www.flickr.com/photos/staceyholeman/collections/72157624566397304/

I liked Mérida immediately - all the airport workers were laughing and talking and my taxi driver was very friendly and helpful (tickets must be purchased at the taxi kiosk, 155p to Centro). He dropped me off at my hotel, Las Arecas - 300p with ceiling fans, 400p with ac which I was happy to have. From the outside it's quite plain but inside it's like taking a step back in time to a more beautiful, restful era - lots of light, antique furniture, cheery blue paint, lovely garden areas and spacious rooms; there’s a full kitchen for guest use which I used for dinner and breakfast. The elderly owner, Raul, and his elderly German Shephard showed me my rooms and left me there alone - they live elsewhere and there were no other guests.

After settling in I left with map in hand to visit as many churches as I could before darkness fell. Mérida is much larger than Valladolid and not as polished and painted, but has a friendly feel and I was impressed with the variety of churches and neighborhoods in the central area. After dark there was live music in nearly every park area - from jazz to Mexican ranchera to rock.

In the morning I visited a few more churches and the wonderful Archaeological Museum before saying a surprisingly sad goodbye to Raul and Las Arecas and heading to the airport.

http://www.lasarecas.com/

This hotel was recommended by Luz en Yucatan because they did not have enough open rooms for us to stay at their place for our entire visit in Merida. I was excited from the online information about Las Arecas. The people who run the place, are friendly, helpful and polite. Our room was not available and they allowed us to keep our luggage there while we were busy during the day. We only stayed 2 days but I would probably not stay here again. The place is charming. Of course, very old, like everything in centro Merida but it could have been cleaner. I don’t mind plaster falling off the walls, simple furnishings and no breaksfast. I expect this at most budget hotels but I dropped an earring back and while searching, I realized the place had not been dusted in a long time. My allergies acted up and I had a miserable couple of days. The bed is comfortable, sheets clean and decent pillows. There is a TV and free wifi , so those are all a plus. We had a casita in the back, which all in all was charming., included a sink, hot plate and refrigerator. The shower had better water pressure than most budget hotels. On ground level , our front door led to a small courtyard with a few chairs and nice plants. There is a community kitchen and looks like you could even wash your clothes. A quaint parlor leads to the outside door. Only a few rooms and no pool . We only paid 400 pesos a day so the price is right. There are a few other local hotels that we passed that looked nice. Santa Lucia, and San Juan. Try these for price and amenities. The San Juan is located next door to Luz en Yucatan, so I am not sure why they recommended a place 10 blocks from them ,but my guess is they did not want to recommend any place that would have been nicer than theirs. Just a guess. If my theory is correct, the San Juan might me a good one to check out. Near the grand plaza, I noticed room rates at 220, 375, 500 and 600 pesos. If you are reading this, I know you are a budget minded traveler but you could do better then Las Arecas.

Great place and great hosts. Feels like home. Have had tow different rooms while staying there-- both were fine. Am recommending that friends stay there as well. Very convenient, near town center, near bus station, good restaurants nearby.

the owner was very friendly & helpful with local eateries & getting around Merida--loved the courtyard area & met other english speaking people so it was good to be able to fully communicate --simple kitchen set up but nice with the essentials--would stay again