Cesky Kromlov is a fantastic place, and Hostel Merlin is a fantastic hostel. The only thing I could complain about would be that it is a little cramped, but in this place I'd call it cosy. The rooms are very well kept and the bathrooms are modern and clean. The beds are reasonable -- and they're separate beds rather than bunks, which is a good bonus.
The receptionist/manager was very friendly and helpful and spoke very good English. A bonus is the free internet, although there is only one computer and it is only available during the day (i.e. while the manager is around). You will get your own key for the room which also lets you in the door downstairs when it is locked late at night.
One of the best things about Hostel Merlin is the location. It is right beside one of the three bridges in the old town centre, and will only take you 1-2 minutes to walk to the square. You couldn't ask for a nicer location, right next to the river in a lovely town.
Cesky Kromlov is one of the nicest towns to visit in one of the best and cheapest countries to go to in Europe. Hostel Merlin is one of the cheapest hostels I have stayed in, and it has to be one of my favourites.
-- Exclusive Hostelz.com Review
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Warning! Do not visit this hostel -- there are plenty of good cheap hostels in Krumlov who will not try to extort extra money out of you or order you to leave in the night after you have paid! The owners insist on the right to refuse entry to anyone they wish (our crime was having a two-year-old daughter) and will call the police to make this happen. It's cheap and nice-looking, but its not worth it. This is the worst holiday experience ever in my life. I, my wife, and 2-year-old daughter were kicked out of this hotel-Pension Merlin in the middle of the night when most of the Hostel and Pension reception already closed and had to listen to lies and insults. 
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