If you arrive in HKT
without a hotel reservation, the shuttle van driver--if you use one--will likely tell you that all the hotels are full and attempt to get you into a hotel they sell for. I highly doubt that ALL
the hotels have been full during the last few years! The van usually stops at a travel agency on the way into town and spends anywhee from 10-30 or more minutes there, so you might be better with a taxi. If you use the van, make sure the driver knows you DON'T need a hotel and that you don't want to stop at the travel agency.
I have no idea what your hotel expectations are, but you should be able to find rooms from $30 US to more than $1,000 US. There are several small hotels located a block or two from the beach that will probably cost around $30-$40 or less. Best solution might be to book a room through the internet for the first night, then find a better room the following day for the rest of your stay.
Main tourist area is Patong Beach, but if you're not into the night life scene, better accommodations can be found in some of the quieter areas, like Kata beach.
FWIW, in Patong there is a bakery (Khun Woody's Bakery) and sandwich shop (The Sandwich Shoppe) owned in part by Woody Leonhard. Woody is the author of the 9-in-1 book "Windows Vista for Dummies" Although I haven't personally met Woody yet, I believe his longtime girlfriend was the best friend of a girl I dated during my earlier trips to Thailand! I hope to be able to get down to see them during one of my trips next year.