The other answers (to whom +1) have cast light on the moral aspect of your question and I agree with them, you can not expect service (even if not used) at no risk/cost for you. I mean, you got one of the last rooms in town because of the conference and they likely lost on big cash because of your no-show. During big events cancellation terms often are more strict than usual, requiring full payment in case of no-show / cancellation instead of first night as often the case.
However this question has to be decided by its legal aspect. I’m not a lawyer nor an expert but I found this interesting enough to look it up:
A written booking confirmation that follows on a room request is a binding reservation. You have a contract, even if a room price was not mentioned, in that case you accept the usual price. This is based on a court ruling (LG Frankfurt am Main vom 18.05.2005, Az: 2-01 S 53/04)
This is basically the a bit more sophisticated confirmation of what @Jan has already said in his answer (big +1) about contracts in Germany.
By now it should be clear to you, that they do have a legal basis against you. What follows is my opinion on your particular case, but not legal advice.
You will also find similar information in this law forum and this homepage of a lawyer (both in German).
Based on your sequence of events: Yes, from step 2 onwards you have undergone a contract with the hotel. Your step 1 was ‘please book a room’. Their step 2 was ‘we confirm your booking’. In my economy and law classes back in high school, step one would have been termed offer and step 2 acceptance of offer. As per the BGB (Bürgerliches Gesetzbuch, German civil code), this is a contract and must be fulfilled.
They fulfilled their part of the contract: They kept a room ready for you for the duration of your stay. You did not turn up (but turning up is not part of the contract). However, you attempt to refuse to fulfil your part of the contract.
If I were you, I would pay. If you don’t you’ll probably get taken to court where you’ll lose with flying colours. And you’ll have to pay the court fees, too.
You explicitly asked them to book a room for you. They sent you an email confirming that they had done this. You are now claiming that “Please book a room for me” meant “Please tell me if there is a room available.” That is nonsense.
You owe them the money.
Based on the sequence of events you posted, here’s the problem.
You seem to believe that there should have been a step #2.5: you write back and accept their offer. The problem, in my opinion, is that you can’t have it both ways: had you shown up at the hotel at step #3 instead of getting ill, you would have rightly expected them to have a room ready for you. And if there was no room and they said “but you didn’t accept,” you likely would have been quite upset.
So now, you want to argue that you never really booked the room because you couldn’t get there, but the room should have been held for you if you did get there. That does not seem like a winning argument.
Had you, at step #2, immediately written back and said “oh no; that costs too much” or something similar, I’d be right there with you. But once they sent you a confirmation of your booking, especially one that included notice of the cancellation policy (and you’ve got Google Translate to help with a language barrier), the onus would be on you to immediately cancel the reservation if you didn’t want it.
As a practical matter, if you live on the other side of the world, it may well not be worth it for them to pursue this in any way beyond sending threatening emails. But it appears to me that you owe whatever their cancellation policy says you owe, or at least that you’d be relying on their goodwill to waive the charge as the result of your medical emergency. Some hotels, if you contact them as soon as humanly possible and explain you’re in the hospital (even sending proof perhaps), might have waived the charges. It’s likely too late for that now though.
Lastly, if you had travel insurance, this is what it is usually for (subject to the policy limits and conditions): covering non-refundable travel expenses in the event of an illness that makes it impossible to travel.
I am not a lawyer but…
When you book a room, and the booking is accepted, you have entered a contract. If you don’t follow through on that contract the hotel is entitled to cancellation fees according to the contract.
The hotel sent you a confirmation of booking. If you had not meant to book you should have corrected them at that stage. But by your own words you did intend to make a booking.
If you knew you were not going to use the booking you should have cancelled it immediately. Many hotels are generous if people take the trouble to cancel.
Stop wasting your own time and money and pay them the fees.
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