In traditional Middle Eastern villages, one would find mangers in the typical one or two room homes, one room being the "family room" and the other, if there were another, the "guest room," according to Bailey. At one end of the family room, immediately at the single door through which one entered the little house, the family's animals entered too. The family brought them in at night. The animals stayed there, at ground level adjacent to the door, safe from thieves and providing warmth with their body heat. There were no "barns" or "stables," no separate quarters for animals.
The family slept in the same room, but on a sort of dais or raised floor. The floor slanted slightly, toward the end of the room where the animals stayed at night, so that when the floor was cleaned and washed, the water drained to the lower portion by the door. (There were steps from the raised floor, down to the part where the animals stayed.)
On the raised portion of the floor, next to the part where the animals stayed, the builders would have made two bucket-like holes, accessible to the animals. They were the mangers, kept filled with straw, so the animals would have something to eat. That's where Mary laid baby Jesus. (Some houses may have had mangers fashioned from wooden boxes.)
There were no "inns" in Bethlehem. That word should have been translated "guest room," the second room that some houses would have. In the particular home where Mary and Joseph stayed, there was no room for Mary and Joseph in the guest room. It was occupied. So they stayed in the family room, with the family that owned the house.
No self-respecting village would have refused a pregnant woman hospitality. Besides, Mary and Joseph were "royals," Bailey writes. They were of the house and lineage of David. And Bethlehem, after all, was the City of David.