We just got back from the Villa Santa Catarina tonight and had to do our part to promote this gem. It is located a 10-15 minute ride from downtown Panajachel but transportation is not a problem. Taking a shuttle (can be set up by the hotel) or grabbing a ride in the back of a local pickup truck (as the locals do) is easy as pie...and the pickups are cheap...10Q for 3 of us.
The hotel itself was extremely clean, one of the best I have stayed in, and the view is magnificent. I have often found that often the bathrooms in Guatemala hotels are usually not the best, but it was great at the Villa Santa Catarina. The staff was very accomodating and helped us quite a bit. The pool was clean and not very busy which was nice.
The restaurant was very reasonably priced and was very quaint. My wife found that the portion sizes were perfect but I would have liked a little larger portions.
Ultimately, this hotel is a great deal and is much preferred over the similarly priced hotels in Pana. It is also nice to get away to a 'retreat' after being in Pana for the day.
Try it...you won't regret it!

This is a gorgeous hotel, conveniently located in a small town. The courtyard is lush and lovely and the dining room, open to the outdoors, is beautiful. The rooms are a bit spartan but you won't spend much time in them. From the balcony outside our room, we could see Lake Atitlan.

I truly loved the beauty of the mountains, volcanoes, lake Atitlan, the cries of the birds, the children at the docks....everything was beautiful and charming at Villa Santa Catarina. The staff was very polite...the food good. Rooms were very clean. Small, but clean. Views of the volcanoes on the lake were everywhere. Well worth your time to go there. And buy the handcrafted clothing and items....the money goes to worthy people.

Stayed two nights. Very satisified in all respects - glad I chose to stay in Santa Catarina, and at this hotel, on first visit to Atitlan. The town itself has nothing to offer, but is a great base if you want to avoid the bustle of Panajahel. Hotel is perfectly clean, upscale but not luxurious. Fine restaurant. Nice big pool if you care about that.