"The bank is next to the hotel."
Translation:El banco está al lado del hotel.
While "to the hotel" seems to make more sense. Spanishdictioary.com appears to show "al lado de" as a somewhat idiomatic phrase that hangs together. The three words almost always come with one another, and generally mean "next to". In "al lado de (el) hotel". The "de" and "el" of course come together as "del" hence "Al lado del hotel."
I used el proximo in place of al lado. It was one of the options so I used it to see what would happen. It was not accepted. :(
I believe esta/estan are used when referencing a geographic location.