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It does seem that it should be possible to offer "free buses" without having to also offer "free hotels inside of the free buses". As an example, I can go to a local store and experience free parking or go to my nearby town and park for free downtown. I can't, however, park and sleep overnight in my car in that shopping centre or in that town.

Why can't buses be regulated the same way?

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Who’s supposed to enforce it? Is the driver supposed to pull over and wake up a sleeping person who has a small but real chance of stabbing them? Any situation where they call the police could be quite a hassle for the other passengers.

It works in every other country.

Because you can’t make a subjective judgement with regard to the worthiness of a particular passenger of a public resource. A car on private property eventually becomes trespassing.

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