Lodging in Bavaria

Welcome to the forum.

Some more details would be helpful. Do you want to use a car or trains for your ground transport? How many days do you have for Bavaria altogether, including Munich? Do you fly into MUC airport? And out of MUC airport at the end of your Bavarian stay? Or are you continuing to some other place in Germany or Europe on the ground? How many days do you expect to spend visiting Munich? Munich is actually a healthy distance from the Alps. If you're planning on more than one day in Munich, staying in Munich for 2 or more nights before or after your alpine-area stay might make good sense.

You could be a little more vague. When? What's "reasonable? What do you consider "lodging" (hotel, villa, etc)?

The Alps don't surround Munich. They're an hour or so south for the city. What was your plan for transportation? Not having a car will seriously affect the places you might want to consider as a home base.

There's a nice place near Tergernsee for around $800/day...

Southern Bavaria and Western Tirol (Austria) are full of bed and breakfasts and other accommodations. I suggest you go on a map, pick a city and go to Booking.com or one of the big websites.
Just about all places you'll stay in the region at kept immaculately clean--despite the price. I've been traveling the region since 1970, and I've never been disappointed.
Note: It's about a 2 hr. drive down to Innsbruck.

Agree with the others. You would need to give us more information as to budget, time of year, duration of stay, and mode of transportation. Munich isn't really handy for sightseeing the Alps, and the Alpine villages and towns aren't really handy for sightseeing Munich. Especially with such young children. A split stay would be more efficient I think. You might also consider a ferienwohnung ( vacation rental) instead of a hotel in the Alps.

Check out home away listings for Garmisch Partonkirchen. Great area, lots to do.

For choosing a location you shall know the rail map of Bavaria.

As long as you do not want to use fast and long-distance trains the Bavaria ticket is a good option for day trips.

Stay at a vacation apartment ( ferienwohnung ). Lots more room and probably no charge for the kids. Some are on farms or at least with a few animals that the kids might like. After you select a town, look on the town website where there is usually a page that will list ALL the accommodations in the town and often the surrounding area.

I've spent almost 4 months, cumulatively (107 nights) in Bavaria since 2000, and I've never needed a car. I've always been able to get to everywhere I wanted to go, and I saved a lot of money in the process vs renting a car. In addition to German Rail's extensive train network (~1000 stations), the Regionalverkehr Oberbayern has an extensive bus network in southern Bavaria. You can find both train and bus connections (in English) on this German Rail (Bahn) website. Children under 15 ride free with their parents on German Rail and RVO buses. It's not that difficult to learn the public transportation system in Germany; those who fail to do so are condemned to renting cars and spending more money.

My favorite place for an (almost Swiss) alpine experience is Oberstdorf, or any of the little towns that line the Illertal in the Oberallgäu. Oberstdorf is a little over 2 hours from the Munich Hbf (3 hours from the airport).

As for accommodations, booking websites are convenient, but you have to realize that in using them, you are limiting yourself to about 1/3 of the available accommodations in most towns (and the most expensive third).

I concur with Stephan, use town websites. They can often be found as www. [town_name] .de. Some have an English side; if not, look for Tourismus (tourism), Übernachten (overnight), or Unterkünfte (accommodations). You probably want a Ferienwohnung (vacation apartment) for four, which typically has one bedroom plus a sofa bed in the living room. Hotels or guesthouses often have a Familienzimmer (family room), which would accommodate parents and a number of kids.