Yes, you need a visa for Russia.
No you do not need to book a hotel in advance for the complete length of your trip. However, it is good to have a hotel address when you apply for a visa and when you enter Russia. Once in Russia, you can of course do camping or private accomodation. In this case it is important to show up in a hotel from time to time in order to obtain a "registration stamp" for your passport (or you can get in trouble when you want to leave the country).
You will need an official invitation letter from Russia when you apply for a visa. If you are not familiar with the visa procedure, better spent a few extra bugs and let a specialized travel agency or visa service help you (recommended).
Enjoy your trip; great people there.
Michael
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