Seems like there is a decent amount, most are within 10km, for the others you'd have to travel a bit.. some of the smaller hotels would probably be questionable..
[url=http://maps.google.ca/maps?hl=en&um=1&ie=UTF-8&q=Hamilton+Hotels&fb=1&sa=X&oi=local_group&resnum=1&ct=image]http://maps.google.ca/maps?hl=en&um=1&i ... 1&ct=image[/url]
Really I don't think its the right time to host a grey cup. There is still a lot of work to be done to the downtown core, there are still uncertainties about the state of Ivor Wynne, and whether or not we will be getting a new stadium in the Pam-Am games bid. There is also the lack of parking space. With a 25,000+ crowd it gets pretty tight, I can't imagine where people would park if there was temporary seating for 35,000(+/-), i don't think there are that many lawns
As for the restaurant argument, while there isn't a lot of big names downtown, there are many small-medium sized local restaurants, but with the amount of people they'd probably have to travel to the surrounding areas. (Upper James/Mountain, Ancaster, Stoney Creek, etc.)
With that said, it is doable, but I don't think management wants the grey cup with the state of the stadium and facilities. The attractions and stuff leading up to the game can be done now with Hamilton Place/Convention Center, Gage Park, Copps, etc.
I would rather do it right then have the grey cup game before the city is ready for it. Wait until we have the proper facilities, adequate hotel space, parking, etc.