The first rule in real estate is always location. Booking a hotel is still real estate. The same emphasis on location exists. Unless you work from home you commute and odds are you hate it. You dread your morning commute. The drive home is only made enjoyable by the knowledge you are heading home . If you don't enjoy commuting at home why would you want to commute on your vacation? A simple easy to remember rule of thumb is if you can't walk from the hotel to most of the sites you hope to see the hotel is likely not in the best spot.
Like all rules this one is made to be broken. You may need parking that's hard to find with a central hotel. Your budget may not extend far enough to pay for a central hotel. You may have waited too long to book your hotel. What ever the reason check on things like transit from the hotel. If your hotel of choice is so out of the way that you won't even be able to take transit it may be time to reconsider your budget.
Staying with the real estate analogy don't go on trust. Verify everything you can. If the hotel claims to be a ten minute walk from a tourist site check the distance with Google maps. If they claim a great breakfast read the reviews carefully. You don't need to be paranoid but a little healthy scepticism can be a great protection.
Once you've narrowed down your list of hotels the next hurdle is the booking. Most hotels offer a range of booking types. The simplest and safest are free cancellation. At least it appears simple. Different hotels will define "free cancellation" in different ways. Some hotels will let you cancel right up to the last moment. Others will have far less generous terms. Read the terms and conditions carefully. Note the last date to cancel without a charge. The next thing to check is the no show fee. The no show fee is what the hotel will charge you if you fail to check in.
At the other end of the scale are prepaid rooms. These rooms are usually cheaper but if for some reason you can't travel your money is forfeit.
Outside of the two simpler options things become even less standardized. Hotels may require a deposit. The deposit may or may not be refundable. Some hotels instead of a deposit will put a hold on your credit card.
Read any reviews you can find closely. Pay attention more to bad reviews then the good. Bad reviews often reveal information you can't find elsewhere: Maybe the front desk isn't staffed all night. Or the elevator is noisy.
Read the terms and conditions before you book. Reading the terms before booking can avoid any nasty surprises later.