If you are looking for a budget place to stay in Zermatt, Matterhorn Hostel is pretty much your only option. It is very affordable, but service is lacking and the hostel is of average cleanliness and below-average service by the staff. It seems fairly secure. Keep in mind that the food will cost you a lot more anywhere in Switzerland.
Zermatt is very small and the hostel is easy to find. A map is available at the train station that includes the hostel by name. There are no cars in Zermatt, so you must leave your car in Tasche just outside and take the train in. The hostel is located on the southeast side of town, where most of the hotels and guesthouses are located.
Rooms and Bathrooms
The rooms are fairly cramped with many beds in each room. There are full-size lockers in each room with keys provided with the room that easily allow storage of backpacks and belongings. The rooms feature standard bunk beds, windows that can be opened when warm, and heaters for when it is cold. The bathroom is shared and is of standard quality, average cleanliness, and stocked with tissue and soap for washing/dishes.
There is a common room on the first floor with a TV/DVD player, three tables and chairs, common dishes, and a small refrigerator. They have a book library with an exchange policy and a few DVDs. The atmosphere is pretty welcoming, with people ready to meet each other, hang out, and drink together, but it is not a big party hostel as there are clubs around and not a lot of space for partying at the hostel (silence from 10 p.m. is enforced). No smoking is allowed in the hostel and there are no balconies fro which to smoke, although outside the main entrance there is a bench and a couple of trays from which to smoke.
Overall, the hostel is a good choice if you are planning to visit Zermatt, as it is the only hostel here and given the extravagant prices of Swiss living, it is very affordable. The service at the desk, however, is lacking -- it's closed at many times and the staff are not very welcoming. There is an additional charge for the continental, all-you-can-eat breakfast. Attached to the hostel is sports bar with food and drinks at average to below-average prices for the area, although still expensive.