"She was living in a hotel."
Translation:Ella vivía en un hotel.
Expressions that signal use of the imperfect (from StudySpanish.com): a menudo, generalmente, a veces, muchas veces, cada día, siempre, cada año, todo el tiempo, de vez en cuando, varias veces. I have yet to see a DL sentence incorporate these expressions. So many of their sentences using the imperfect tense are, well, imperfect.
I think it would require the imperfect, but not sure "ella estaba viviendo en un hotel"
found this explanation: As one of Spanish's two simple past tenses, the imperfect indicative has a conjugation that is essential to learn. It is the verb form used most often to describe conditions as they existed in the past, to provide background to events and to describe habitual actions.