For Panama City, best location is as mentioned near the Panama City Mall. You have your choice of low end motels (Super 8); medium range motels (LaQuinta/Comfort Inn) and higher end hotels (Hilton Garden Inn/Courtyard by Marriott/Holiday Inn Select-- very swanky
). You might find some deals on the beach this time of year if you are going to be staying for an extended period of time, think condo. Otherwise, comparable hotels are about $5-10/night more on the beach. As for Highway 98, I wouldn't avoid those places altogether. There are 3 decent places-- Ramada, Comfort Inn and Quality Inn. The Econo-lodge and Days Inn are okay. Stay away from the no-name hotels near the college with the exception of the Hathaway Inn. It is right across the street from Gulf Coast College and is okay.