The best way to make reservations for Hot August Nights is to plan way ahead. Many participants who come back year after year make their reservations for the next year when they check out of their rooms. Rooms are scarce the closer it gets to the event.
Check out a website like the Visit Reno site (below) that offer a list of hotels in the area. Most hotels and resorts offer reservation information online, so you can check out quite a few different hotels in a relatively short amount of time.
Don't be afraid to put your name on a waiting list for a room; sometimes cancellations do occur.
Think outside the box. If you can't find a room in Reno, think about Carson City, Fernley, Truckee (California) and even Lake Tahoe or Minden/Gardnerville. They're a little further away from the action, but they are all really just a short drive from Reno, and often the hotel rates in these surrounding cities are lower than the Reno-Sparks area.