Do hotels send out wifi signals that place you there?
Yes, WiFi is a major part of location services and is used to locate Android devices. It provides a coarser location fix much more quickly than GPS. It's accuracy is usually ~50m or better, but there are examples of it not working properly, so take the entire history into account and not single location fixes. 

If you drive by a hotel while you are supposed to be somewhere else and your phone locates itself using the hotel WiFi, you were still at or near the hotel. WiFi signals by design do not travel very far, unless you specifically setup special directional antennas, which definitely do not come with Android phones.