July 3rd is a Tuesday so you probably won't have too much problem finding a hotel without first making reservations. Still, prepare yourself to have to check 2 or 3 before finding available rooms (you should find one on your first attempt, but maybe you won't like their prices/rooms).
Regarding recommended hotels in Toledo, hopefully the fine people here have some suggestions. Until then, I invite you to use the SEARCH link in the upper righthand corner and use TOLEDO HOTEL as your keywords and you should find a number of thread on this topic.
Good luck and have a great time in two of Spain's finest walled cities. I just LOVE Avila!!!
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