Lalibela's sleeping choices are improving all the time, especially in the midrange.
Discounts, often very large ones, are negotiable in most hotels from April through August. Vacancies are almost nonexistent during the festival period and European Christmas, so reservations are essential. However, prices for reserved rooms during these times can quintuple or more. If you arrive during a festival without reservations, look for brokers who work the centre of town hiring out rooms in people’s homes.