Hotel Regis is a great place to stay when in Panajachel. The price was right ($61) and the location was amazing. It is right in the center of Pana, just off of Santander (the main street insofar as tourists are concerned). However, it is behind a bunch of buildings and far enough off of the street to be really quiet. The rooms are a bit shabby, but are super clean. The woman making up our room took the time to fold our towels into swans (alright it may be hokey but the staff really goes that extra mile). The grounds are lovely and include a playground and a foosball table for children. There are two outdoor hot tubs made of stone that have water heated by underground volcanic springs as well as a wood-fired sauna. The hot tubs can easily fit a dozen people and we met some great folks there from all over the world. Hotel Regis has a restaurant, but we did not eat there, though it looked pretty nice.

The location is central and the staff was helpful but the rooms were horrible smelly fromt he cleaning detergents, the bathroom was old didn't dare to shower there, the beds were old and the room felt like a louzy dorm in a hostel. The hotel is very pricey for what it has to offer. The breakfast was ok and affordable.

 Delightful hotel with local flavor.  Right downtown so you can can walk to the Lake and to any restaurant or store in charming Panajachel .  Free wi fi available in bar area. Great grounds on hotel site. Friendly staff.

Be sure and take a boat ride on Lake Atitlan and visit some of the villages around the lake.  Our favorite was Santiago.  Be sure to search out the house of Maximón  for a real cultural experience while you are there.

If you are interested in their traditional weavings, we found the best prices in Santiago in the marketplace.

I stayed here for 5 nights in early November. It was a lovely garden setting with the rooms well spread out and many places to sit and enjoy the flora or peacocks. Rooms were very well taken care of every day - including water replacements and fancy towel arrangements. Breakfast was amazing with a personal omelette chef and waiters who carry your food and keep the coffee coming. It is centrally located however set back from the street and very secure. Internet excellent. A bustling army of staff at the ready.
unrelated note: go out turn right, on the left about ten minutes walk you will find Telma - the skirt lady. Choose from her stock or in just an hour or so she will have one made up for you in the fabulous fabric of your choice...also a private boat (lancha) can be just the price of 3 tickets on the public boat if you to wish to visit several villages.
note: there are rooms with kitchens - 1 BR apts available for about $400 a month