The site referred to all of Jerusalem as an Israeli settlement.
After an inquiry from an outraged customer, Booking.com changed its designation of Jerusalem.
But it continues to use the words "Israeli settlement" for any town with any Jews.
While Ramallah is considered "Palestinian territory":
Bethlehem and Hebron, with very small Jewish populations are where the vast majority of both cities are under full PA control, are still considered "settlements."
You can see that the Arab hotels that are deeply in Area A under full Palestinian control are considered to be within "Israeli settlements."
Bizarrely, the towns most associated with being Israeli settlements like Gush Etzion or Kiryat Arba are given no country whatsoever:
And if you look for hotels near Kiryat Arba, sure enough - you see the Arab hotels in Hebron.