I was there december 2011 with my 80 years old mother. It was a mistake. The place is a little far from the mais square, not very clean, therrible bathrooms and is not climatized.
I would say there is a hotel at the main square called Parador ( if I am not mistaken) that would have been much better although I heard there is no good place to stay in Chaouen.
Still, if you are young and want a -more or less- proper place and cheap... go for it. They serve breakfast and there is wi fi for free.
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