If you believe in Laissez Faire, or that the market should be allowed free rein to shape or society, you would perhaps disagree.

While I can agree to some extent to this being the metric optimized, this metric depends on who gets to be a citizen. For example, the situation when the city becomes too expensive for particular class of people and they move out leads to increased in quality of life of remaining citizen, but people (not me) usually express negative views on this.

That's true, but not what I meant: by changing the group you measure the metric over, you change the value of the metric.

The citizens, who live and work in attractive city, pay hefty taxes to make the whole thing possible - running the public transport, collecting the garbage, keeping the running water and sewage operating.

Obviously taxation policies and city budgets vary a lot from place to place, but it's very common for these things to be funded by income taxes on the citizens salaries - which is fine with the citizens, but then why should to tourists get to come in and freeload off all the nice things paid for by those taxes?

In a parallel universe where all these services were paid for by taxes on property values or rents, I would agree with you - whoever wants to pay the most per night can have it, but in the real world the market is already skewed to start with.

For the same reason retirees should not be permitted to move into a city funded by income taxes.

In the US, far more cities are funded by property taxes than income taxes. NYC and Yonkers are the only cities I can think of with an income tax.