The translation "we would rather sleep in the hotel" should also be accepted. For example, a group checked into a hotel and is now backpacking. It gets late. So they ask themselves: shall we spend the night here, or go back to the hotel? A couple answer, "we would rather sleep in the hotel." Which hotel? The one they already checked into, which is a very specific hotel and thus requires the use of "the."
What about when they are standing in front of a hotel and it is clear it is probably the only one in the town? A or the?