In the times of Bayis Sheini, most Jews lived in Chutz La’aretz. Being oleh regel from Bavel or from Greece was a major undertaking and not one that could be done every year, so when a family from, say, Bavel was able to make the trip for Yom Tov it was a very big deal. Many of the kehilos in Bavel maintained guest houses in Yerushalayim so when any of their mispallelim were oleh regel they had a place to stay. Reservations were, of course, required and had to be made well in advance, maybe years in advance, of the trip because, as you may imagine, finding a place to stay in Yerushalayim for Yom Tov wasn’t easy. Come to think of it, it’s not so easy today either.
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