For most trips, accommodation is the largest line in the budget, ahead of flights. The reason is structural: it is the only major cost charged repeatedly for the whole duration.
It is the only cost that recurs nightly
A flight is bought once regardless of how long the trip lasts, so its share of the budget falls with every additional day.
Accommodation is charged for every night, so its share rises with duration and eventually overtakes the fare on any trip beyond a few days.
This is why extending a trip is cheaper per day than taking a second one, and why the flight is the wrong thing to optimise on a long journey.
Rates carry fixed costs that do not fall
A hotel room's price reflects the building, its financing, staffing, cleaning, utilities and taxes, most of which continue whether or not the room is sold.
The marginal cost of an occupied night is small, which is why last-minute discounting is possible, but the average rate must cover the fixed base.
Local occupancy and tourist taxes are usually charged per person per night as well, which compounds with duration in the same way.
Location premiums are steep
Central accommodation costs more because central land costs more, and the gradient over a short distance can be sharp.
The saving from moving out is partly consumed by transport and time, and the balance depends on how many trips into the centre the itinerary requires.
Staying centrally in a smaller room often beats staying peripherally in a larger one for short city trips, and the reverse holds for longer stays.
Substitutes change the arithmetic
Apartments with kitchens shift some spending from restaurants into groceries, which matters more the longer the stay and the larger the party.
Guesthouses, hostels with private rooms and rural lodgings occupy a middle band that is frequently overlooked between hotels and rentals.
Weekly and monthly rates on longer stays are often substantially discounted, since operators value the reduction in changeover work.
Where the real savings are
Shifting dates by a few days around a demand peak usually saves more than downgrading the property, because rate variation within one hotel exceeds the gap between hotels.
Reducing the number of separate places stayed cuts both cost and lost time, since each move consumes a check-out morning and a check-in afternoon.
Booking refundable rates and rechecking closer to the date works where supply is ample, and fails in genuinely constrained markets and event weeks.