There are frequent buses between Morelia and Pátzcuaro. They will be very crowded at that time of the year and it's quite likely that hotels are already booked. At any rate, prices will be higher. Read the reviews both here on TA and on somewhere like booking.com. Make reservations NOW if you can.
I can highly recommend a central hotel in Morelia that I have stayed in twice and is an absolute bargain.
If you look on the Pátzcuaro forum you will see many previous thread on the Day of the Dead there, since it's a big thing.Edited: 27 February 2018, 09:14