There is a lot of money in affiliate fees for booking hotel reservations.
4% affiliate fee of a $500 hotel booking is $20
If you can get 5,000 people to use your affiliate link and book a $500 stay, in a year that's a gross of $100,000 affiliate earnings
People paying high dollar for a CITYHotel.com domain believe that having an exact match domain will give them a significant advantage in search engine rank and in user trust. They factor in the amount of time it will take to earn enough affiliate money to pay off the domain and then start profiting