I have organised a few of these, for a large family and it is, indeed, a minefield.
It is impossible to make it 'fair', so don't even bother fretting over it. So long as people know you have tried your best, which you will do, that's enough.
If you put two identical couples into two identical rooms, one couple will still whinge about how they have rubbish cushions or are further from the bar.
The answer is to tell people up front, let them know that its not all going to be equal, there will be winners and losers and the important thing is for people to get their enthusiasm going, because they control that, and it will see the event through successfully.
So far as the opening question, how to pay ?
Pricing regimes vary. If you stay in a B&B, you pay per person. If you stay in a hotel, you pay per room. If you hire a farmhouse, you pay for the site.
If you stay at a formal lodge, like CP, you pay per room with a maximum occupancy.
As you are probably paying for a site (OP) , it will be an extremely tricky one, because it will be a fixed cost with no rules that you can blame on someone else :)
If I were in that situation, I would come up with three different payment schedules and put it to the vote.
- split the total by siblings
- pay per room
- pay per person with kids at half price
in case of a tie, let the one with the biggest gob win. at least you may get some peace
distribute the rooms randomly. pull them out of a hat. except parents get the best room.
encourage the kids to move around and have midnight parties that no adult knows about. They will have the time of their lives and will make friends for life.