My friend had a flight TLV - IST - MAN the last departure of the day from TLV, then from there took the next morning connection to MAN, with overnight layover of 8hr 10 min, and was told that there must be no possible shorter connection on both ends, meaning, that even though the next possible connection for him to MAN was over 8 hours after his first flight arrived, since he could have left TLV on an early morning flight and still got the connection to MAN, he is not eligible for a hotel.

So the rule seems to be that only eligible for hotel when no possible shorter connection on both ends.

Maybe this is obvious to some.