The value of a hotel stay includes a lot more than the stripped back services these people have access to, it's not like they are on holiday, and they're in rooms not meant to accommodate families or extended stays which can make it an unpleasant experience, not whatever you're imagining.
Hostels have even less infrastructure to deal with people in them or deal with government bureaucracy that goes with any of these programs.
Camps like ex army bases have been suggested and I think even trialled but have their own issues, soldiers will put up with the bare minimum and the bases are no longer fit to provide that.