I've photographed and even crewed a bit at quite a few balloon festivals ....
First of all, most have a hare and hound chase format, starts well before dawn...
Both a telephoto and a fast, wide lens might be useful. The first balloon to go is the "dawn patrol" and goes out in the dawn or as it's just starting to break. There can be good shooting opportunities as it lights up as they do "a burn" in the dark sky.
A wide angle lens is useful right around the balloon as it's being inflated, or even inside it (ask first, of course).
It will also be useful later during the mass ascension of large groups of balloons. Between half and hour and 45 minutes later the rest of the balloons are released. Usually you can walk among them as they inflate... initially with blown air from big fans, then with the burners and hot air. It's usually still pre-dawn. A mass ascension of a large number of balloons can be quite dramatic... Often right at the crack of dawn. You'll have to decide whether you want to shoot the ascension backlit or with the sun behind you, or off to one side or the other. All can be good choices.
Once the balloons are in the air, you'll probably want your telephoto. You might be able to chase them. They will be trying different altitudes, looking for an air current that will take them in the direction of the hare balloon. Their goal is simply to land the closest to the hare that left earlier. Depending upon air currents, they can scatter slowly or quickly, and might end up going a lot of different directions. It's all up to the whim of local breezes.
It can be great fun to get onto one of the chase vehicles. (Though it's even more fun to get into one of the balloons!) Landings are often exciting!
Often the whole thing is over by 8 or 9 am (and we all headed for a big pancake breakfast). Many places, it's too windy later during the day to balloon safely.
I haven't been too involved with ballooning since moving to California, but used to go to festivals in Colorado, New Mexico and Arizona. There were as many as 600 balloons in mass ascensions at some of the larger festivals.