The official conference hotel is the center of conference activities. It's a quick trip to get to the technical sessions, it provides opportunities for networking with conference attendees, and it makes it easy to return to your room. That's obvious. But there are other reasons that you need to consider before you look at another hotel.
In return for the use of the hotel's meeting facilities, the conference guarantees the hotel that a certain percentage of attendees will stay in that hotel. The hotel discounts the rate for conference attendees from their normal charges.
If the conference does not meet the contracted sleeping room commitment, it must still pay the hotel for these rooms. Unfilled rooms can cost the conference thousands of dollars, hurting both the current conference and the next conference's ability to negotiate a beneficial hotel contract. In both cases the registration fee is then under pressure to increase unreasonably.
What if we don't contract for sleeping rooms? Attendees will pay more for their hotel rooms and the conference will incur additional expenses for meeting room rental fees, which would increase the cost of registration.
Additionally, the hotel will not hold a block of rooms for attendees, which may leave some people far from the conference venue.