Bavaria vs Austria

"Is one area more expensive than another?" I think you can find very expensive and relatively inexpensive places in each country. I suspect Germany might be a little less expensive, on average, than Austria, but then, the Germany Alps are much lower than those in Austria, so you might have a better chance of finding snow in Austria in mid-December. I know of one ski resort in Germany that doesn't normally start operating until Christmas. An area I particularly like is the Iller valley in the Upper Allgäu, near the ski area of Oberstdorf. The adjacent Kleinwalsertal (Austria) is higher and more likely to have snow.

I prefer the Tirol region of Austria. There are hundreds and hundreds of accommodations in the small cities east and west of Innsbruck. Many are very reasonably priced. You can easily get in and out of Munich by train.
Due to geographic boundaries of the Alps, I always find it best to see this region by rental car.

I prefer the Tirol region of Austria. There are hundreds and hundreds of accommodations in the small cities east and west of Innsbruck. Many are very reasonably priced. You can easily get in and out of Munich by train. Due to geographic boundaries of the Alps, I always find it best to see this region by rental car.
And the scenery is absolutely breathtaking.

There's usually enough snow by mid December in both locations, although there's a chance the coating could be a little thin in the valleys. What you're describing would be a better fit in one of the larger resort towns. My only winter experience in Tyrol is in Erhwald and Lermoos, but these are maybe a little too small to have everything you want to do. Some of the better known Tyrolian resort towns further to the east probably have more of what you're looking for, but I have yet to visit these. In Germany, the two towns that would best suit your requirements are Garmisch-Partenkirchen and Oberstdorf. GaP's a little larger, and has more night life, Oberstdorf attracts a more of an "Old Money" demographic, so there's more spa hotels (look for an establishment that designates itself a "Kurhotel". Generally, the more stars, the more elaborate the bathing facilities). I know GaP has winter walking trails, Oberstdorf probably does, but I'm not 100% certain. Cost is relative to the town, not necessarily the country. For example, Lech am Arlberg in Austria (Vorarlberg, not Tyrol) is generally very expensive. Oberstdorf is more expensive than GaP, and both are more expensive than Lermoos and Erhwald. But that's not a hard and fast rule, you could certainly find a cheap meal and room in Lech and more expensive counterparts in GaP. And all of these are cheaper than the resorts in Switzerland.

Hi Joanna, No one area, meaning either Bavaria (Germany) or Tirol (Austria), is more expensive than the other. You can spend as little or as much as you care to. We average about 60 to maybe 70 Euro a night for 2 adults, incl. a buffet breakfast in both area's. We stay in family run B&B's, pension's, etc. outside of the cities. We visited both area's many times, but the nearest to when your traveling was our trip in late Nov. 2010. Between our bases in the Berchtesgaden area and Innsbruck area we had 4 days with some snow fall. At this time of year, the Christmas/Advent Markets will be open, which was the reason for our trip in 11/10. Salzburg's and Innsbruck's various markets were terrific. If you're looking for some nightlife at this time of year, these would be good bets.

"Oberstdorf is more expensive than GaP" Generally. I'm about to spend a week in a Ferienwohnung for 2 in Fischen, 4 km from Oberstdorf on the train line into Oberstdorf, and it will cost me 299€ for the week.