Learn Portuguese (Portugal): A chave desse quarto está aqui.

desse is a contraction of the preposition de (of) and the demonstrative word esse (that). In Portuguese, these short words often glue together. We use esse because quarto (room) is a masculine, singular noun.

Why is there a contraction with de (of) when the English translation says key to that room?

While English speakers say the key to a room, Portuguese speakers say the key of the room. Because of this, you need the preposition de, which merges with esse to form desse.

Could I use daquele instead of desse?

Yes, but it changes the meaning slightly based on distance. You use desse when the room is close to the person you are talking to, or just a little bit away. You would use daquele (of that one over there) if the room is far away from both of you.

Why is está used here instead of é for the word is?

The verb estar is used for things that are temporary, including physical location. Because the sentence is talking about where the key is located (aqui or here), you must use está.