When we looked to book a room for the Day of the Dead weekend, we found Tripadvisor's top ranked hotels were either full or had jacked their prices to ridiculous levels. We found Hotel Casa Las Mercedes after searching your reviews and it was even better than described at a fraction of the price of other hotels. Even though Independencia is a main road and several brass bands passed by en route to the cemetery during the festivities, they were barely audible in our room which faced the road. The staff was great, the courtyard quite pleasant and the recently renovated room very comfortable. The 10 minute walk to the Cathedral took us by several merchants, restaurants and bars that catered to friendly locals before entering the touristy area.

We visited Oaxaca during the Day of the Dead weekend, and most of the highly recommended hotels were either fully booked or overpriced (>US$400/night)...but lucky for us, we stumbled on Hotel Casa Las Mercedes, which was a great value. The staff was very friendly, the rooms in the traditional courtyard house were recently renovated, and the area was quiet (on one of the larger roads, but you can't hear any street traffic in the rooms, it's a solidly built older building). It is a couple of blocks further away from the Zocalo and other downtown attractions than most of the other central hotels, but the area was safe, and the distance easily manageable. We were traveling with my retired parents, who thought the hotel was great, and the staff was very helpful with our 1 year old son also. If money is no object, there are nicer hotels, but we were super-happy paying US$100/night on the biggest tourist weekend of the year for a clean, comfortable, traditional hotel with friendly staff. Two thumbs up.