Located about a 5 minute walk from the Main Square, the Santa Lucia is my recommendation for a place to stay in Merida. It’s quite a bit smaller than Nomadas and the facilities may not be as nice (depending on what you’re looking for) but the atmosphere more than makes up for it.
The staff are what make this place shine. They’re friendly, fun and enjoy sharing their knowledge about Merida and Mexico in general. I’ve spent hours sitting and talking to Jaime about the history of Mexico and taking Spanish lessons from Rafael. Alex, who covers the night, can be a bit quiet at first but once he gets comfortable he has a great sense of humor and is fun to talk to.
On top of the staff are the visitors. Almost everyone who stayed at Santa Lucia was social and enjoyed talking to the other visitors. This made for many great nights of shared meals, drinks and stories while sitting on the patio listening to the music from the pub next door.
The smaller dorm can be a bit warm (though the aircon helps) but IMO it’s worth it. Add to the friendliness factor a nice breakfast (eggs, bread and a selection of fruit) and a cheaper price than Nomadas and it makes Santa Lucia the easy choice. As an added bonus, if you’re staying in Merida for a while they have a special so that if you stay 6 nights you get the 7th night free which makes the average nightly rate @ 81 MXN for a week.