When Joseph and his pregnant fiancée Mary came to Bethlehem, did they do so in the middle of the night, trying desperately to find a room in an inn only to have the innkeeper tell them “no vacancy?” Most likely not. Joel Green gives a better and more biblical understanding in his commentary on Luke 2:7:
“The narrator apparently pictures Joseph and Mary arriving in Bethlehem and staying there for some time before the delivery of Mary’s baby (cf. 2:6, ‘while they were there’), not their inability to locate lodging on the night of their arrival resulting in the birth of the child in a stable.”
“The term Luke employs here for ‘guest room’ is often translated in English as ‘inn.’ However, the same term appears in 22:11 with the meaning ‘guest room,’ and the verbal form occurs in 9:12 and 19:7 with the sense of ‘find lodging’ or ‘be a guest.’ Moreover, in 10:34, where a commercial inn is clearly demanded by the text, Luke draws on different vocabulary. It is doubtful whether a commercial inn actually existed in Bethlehem, which stood on no major roads. It may be that Luke has in mind a ‘kahn or caravansary where large groups of travelers found shelter under one roof,’ but this does not help our understanding of Mary’s placing the child in a manger.”
“That ‘guest room’ is the more plausible meaning here is urged by the realization that in peasant homes in the ancient Near East family and animals slept in one enclosed space, with the animals located on a lower level. Mary and Joseph, then, would have been the guests of family or friends, but their home would have been so overcrowded that the baby was placed in a feeding trough” (p. 128-9).