As hostels go, the spacious Yakumama, named after the Inca water goddess, is one of Cuenca's best. From the light, roomy 10-bed dorm down through the nicely hand-painted private rooms to the cool common areas (a courtyard full of murals and plants), the owners get what a great hostel needs. There's a community bulletin board posting current activities/events around town.
Staff can be hot and cold, and the place could be a little cleaner, but it remains a go-to spot to meet other travelers and hang in the lounge. Nonguests can also enjoy cocktails in the lounge, which opens to the public from 5pm to midnight. Regular live music, too.