When in Doolin, I have almost always stayed at the Rainbow Hostel, just a couple of doors up from McDermott’s Pub. In addition to having an ideal location, it’s a really comfortable, friendly place that seems to attract great conversationalists and just plain cool people. I’ve never had a lonely evening there.
The first picture shows the front of the Rainbow Hostel itself, while the second is the view from the common room window: the ruins of an old church on a hill and the accompanying cemetery. The church is within walking distance from the hostel, and locals keep the site in good condition: clean and mown, etc.