Hotel Xibalba is probably one of the best places to stay in Palenque, if you want to avoid the quite unattractive city centre but still want to be near the town instead of the remote Panchan area. It is located in a quiet green neighbourhood.

Staff is so friendly, the rooms are very comfortable, bathroom is fine, airco is good, (not seen a single bug)... what else do you need?
At night, it's nice to have a drink in their open-air bar!

It offers the typical trips to the ruins of Palenque, Bonampak and Yaxchilan, and to the waterfalls of Agua Azul and Misol Ha. But, at least in the low season, other agencies in town offer with lower rates. So I advise you to check as many agencies as possible; anyway you'll end up in exactly the same vans, no matter what price you paid.

I didn't really like this hotel, probably because the decor (or lack thereof) in the room was a bit soul destroying. Other than that the hotel was fine. The front desk service was good, everything in the room worked fine, and when we had to leave early in the morning the cafe was happy to make us a sandwich "para llevar" (take away). Their prices were very reasonable.
The hotel is in a good spot - leafy and cool compared to the relentless heat and sun in the main streets of the town. The restaurant across the street was also friendly and offered a free margherita with dinner.
Palenque is kind of in the middle of nowhere so one can't really expect world class accommodation. Xibalba was OK though next time I'd probably avoid Palenque town and consider looking for accommodation at El Panchan.

The hotel is in a quite street, not far from the town center, which is crowded and roumorous. I enjoyed the after dinner staying seated at the table on the street, drinking hot coffee and watching people passing by (not so many people but is ok). The room smelled a bit mouldy, but it rains so much in this region I think is normal. We used internet for free (have to monitoring the Dean hurricane arriving...) so very useful.

We stayed at Xibalba for three nights in the air-conditioned section. The room was large and clean and everything worked. The mattresses were a little hard, which is a common problem. The staff was very helpful and reliable and arranged a great tour for us to Yaxchilan and Bonampak. Wow! Don't miss it!
For the reasonable price this is a great place. I also highly recommend the restaurant across the street, fabulous dinners and breakfasts too.