create custom content type

Use this code

function hotel() {
	$labels = array(
		'name'                => _x( 'Hotel', 'Post Type General Name', 'text_domain' ),
		'singular_name'       => _x( 'Hotel', 'Post Type Singular Name', 'text_domain' ),
		'menu_name'           => __( 'Hotel', 'text_domain' ),
		'parent_item_colon'   => __( 'Parent Hotel:', 'text_domain' ),
		'all_items'           => __( 'All Hotel', 'text_domain' ),
		'view_item'           => __( 'View Hotel', 'text_domain' ),
		'add_new_item'        => __( 'Add New Hotel', 'text_domain' ),
		'add_new'             => __( 'New Hotel', 'text_domain' ),
		'edit_item'           => __( 'Edit Hotel', 'text_domain' ),
		'update_item'         => __( 'Update Hotel', 'text_domain' ),
		'search_items'        => __( 'Search hotel', 'text_domain' ),
		'not_found'           => __( 'No hotel found', 'text_domain' ),
		'not_found_in_trash'  => __( 'No hotel found in Trash', 'text_domain' ),
	);

	$rewrite = array(
		'slug'                => 'hotel',
		'with_front'          => true,
		'pages'               => true,
		'feeds'               => true,
	);

	$args = array(
		'label'               => __( 'Hotel', 'text_domain' ),
		'description'         => __( 'Hotel information pages', 'text_domain' ),
		'labels'              => $labels,
		'supports'            => array( 'title', 'editor', 'excerpt', 'author', 'thumbnail', 'comments', 'trackbacks', 'revisions', 'custom-fields', 'page-attributes', 'post-formats', ),
		'taxonomies'          => array( 'category', 'post_tag' ),
		'hierarchical'        => false,
		'public'              => true,
		'show_ui'             => true,
		'show_in_menu'        => true,
		'show_in_nav_menus'   => true,
		'show_in_admin_bar'   => true,
		'menu_position'       => 5,
		'menu_icon'           => '',
		'can_export'          => true,
		'has_archive'         => true,
		'exclude_from_search' => false,
		'publicly_queryable'  => true,
		'rewrite'             => $rewrite,
		'capability_type'     => 'page',
	);

	register_post_type( 'Hotel', $args );
}

// Hook into the 'init' action
add_action( 'init', 'hotel', 0 );

You can create categories of state and cities,or
you can also create the post meta.
this post meta will two drop down first for state and second for cities.
see here how to create the Meta Box

http://www.deluxeblogtips.com/2010/04/how-to-create-meta-box-wordpress-post.htm

sorry,

http://www.deluxeblogtips.com/2010/04/how-to-create-meta-box-wordpress-post.html