The many extra taxes and tariffs on guests. Occupancy taxes, tourism improvement fees, etc, that the city is only able to capture by abusing its control over the hotels.
It's easy to pass laws that don't affect people who live in your area because nobody is that motivated to stop you. Hotels and other legitimate businesses suffer because the city stole (took because it could, for no good purpose) money from the guests that they'd have otherwise spent on services they actually wanted.
The hotel should only be billed for services delivered. If the guests consume a lot of water the hotel needs to pay for it, etc. If that rate is below cost, it should be raised.
The extra tax is just a "because we can" and is one of the things an efficient economy will route around.
> they're definitely knowingly enabling their customers to do illegal things.
They're enabling a primarily legal operation - people renting things. It's not their job to police which units are legal to rent and which are not.
I could buy legal things at Costco and commit a crime with them and it's not Costco's duty to stop me.