Seneca Lodge used to be where all the top race teams and drivers used to stay back in the days when top teams were still hauling their cars on open trailers. It's still popular with race fans and spectators, and the bar there has old racing memorabilia and winner's wreaths on the walls. Decent bar, excellent food in the restaurant next door.
Rooms are basic and in some cases almost rustic, but rates a couple of years ago were $55 per night for the motel-style rooms. The place is less than 5 minutes up the hill from the village of Watkins Glen, and about 1/4 way from the village to the race track, and on a nice riding road as a bonus.
http://senecalodge.com/
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