The Nativity story is easy to embellish. The prominence of the manger, mentioned three times in Luke's narrative, has inspired numerous depictions of the birth of the Christ Child in an outdoor stable, surrounded by oxen, donkeys, and sheep. A manger did usually serve a different purpose, as a feeding trough for livestock, but there is no mention of any animals being present at the actual birth. Neither is there mention of the Holy Family's lodging being a stable. Joseph and Mary were in town for a census. Their logical first choice would have been the guest room in the home of their Bethlehem relatives. However, they were not the only kinfolk who had made the journey and, by the time they arrived, the upstairs guest room had been taken. The familiar phrase, "no room for them in the inn," from most English translations throws people off. The word rendered "inn" (Greek, kataluma) means, literally, "guest room." Luke also uses it chapter 22 when Jesus instructs his disciples to ask their host on his behalf, "Where is the guest room where I may eat the Passover with my disciples?" (v. 11).
N.T. Wright renders the famous passage from Luke 2:7, "there was no room for them in the normal living quarters." A literal translation would read, "there was no place for them in the guest room."
Instead of the furnished guest room, then, Joseph and Mary had to settle for a room on the ground floor usually reserved for livestock. A nearby feeding trough, a manger, made a convenient makeshift crib for the newborn Jesus. Perhaps the most realistic depiction of the Nativity is this 1891 painting by Julius Garibaldi "Gari" Melchers (H/T to Greg Griffith).