The Drunken Mermaid is located just inside the main entrance of the The Souk inside The Pirate Market. The bar itself is small but supremely crowded by merchants, sailors, and pirates and what appear to be several drunken Orcs. The line for the bar is more of a mob at least four deep.
The tables outside the Souk entrance also appear to be affiliated with bar, though strangely enough you see what appears to be an auction of a just vacated table conducted by one of the waitress.