I don't think this is a totally absurdly black and white case, it's no oppressive regime rearing its ugly head. Both sides have ulterior motives (AirBnB and the established hotels), but their arguments aren't totally without merit. And one thing that people keep forgetting, is that this law isn't breaking new grounds, both renting and hotels are pretty heavily regulated, mostly for a good reason. Yes, for the hard-core magical hand of the market libertarians this is another nail in the coffin, but I bet that a lot of people that get too angry in this discussion don't have problems with laws against arbitrary landlord decisions or hotel health and emergency codes.
Let's keep this reasonable…