Since you say you are looking at car rentals, I am assuming you decided to rent a car? If so, most definitely find a hotel in the suburbs. A hotel in Downtown Atlanta will easily cost more than $100 on a weeknight, much more on a weekend, and be higher still near the airport. You can easily find a Comfort Inn, Holiday Inn, La Quinta, etc. in the suburbs on a weeknight and pay $50-80 a night. Again this is a weeknight. Some of the suburbs to look into that are nice and close are Roswell, Marietta, Dunwoody, Chamblee, Norcross (pushing it out a little), Kennesaw (a little far as well). Any hotel in these parts should be decent price, and still clean.
How long are you staying? If you are only staying one or two nights, make sure to do it during the week and save a lot of money. If you are doing it for a week (or close to it) many places will rent by the week. Even if you only are there for 5 day sit could still be cheaper to pay for the full week that way.
I am assuming you are flying down. If this is the case, consider not renting a car. Especially if you are only going to be here for one or maybe two nights. The money you save on the car rental you could put towards staying in a hotel in Downtown. The MARTA transit system is not great, but it does work very well for travel to/from the Airport and through Downtown. It is probable you would not need a car for a short trip, and if you are not used to Atlanta traffic you do not want to experience it. I lived there for a lot of years and few cities compare (maybe LA, NY, DC). Plus it would be fun to stay right in the city for your grandson, but he probably does not care much about the car rental. Other activities accessible directly from MARTA would be the High Museum of Art, the Center for Puppetry Arts, Fernbank Natural History (with a bus trip), Falcons (football team, with a bus), Zoo Atlanta (with a bus), Aquarium, Underground Atlanta, Coca Cola Museum, Olympic Park, Piedmont Park/Botanical Gardens (with a bus), Buckhead shopping/dining, and many many more. Have Fun, it is a great city.
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