I might be able to answer that one a little bit as it came up in a Q&A back when Steve Patterson was GM with a small group of us that were on the Blazer Advisory Board.
It's not that there aren't enough hotels. It's that the NBA wants a large, 5-star type hotel where a majority of media, tourists, outside fans etc can stay in one location close to the event. There are events outside of the All-Star festivities that sponsors want upscale convention space for without people having to travel in from other hotels. Currently, there are plenty of hotels but they are not of the caliber the NBA wants for an event like that or they are too small and/or not close enough to the Rose Garden.
Hope that helps.