That’s the free market working as it should. You under your own volition choose the trade offs between hotels and AirBnbs.
The government’s job even with “free market capitalism” is to regulate the market to manage both positive and negative externalities.
As for regulations, when regulations fail to keep up with reality, well, guess who wins. If you want to tell your neighbor what she can do with her house, I guess maybe you should've outbid her when it went up for sale.