Airbnb wants the narrative to be that most of their business is regular people renting out a spare room to make some extra money. Certainly that's a component of their business and one I think, and think most people would agree should be encouraged.

No, it should absolutely not be encouraged. As a neighbor I do not appreciate a steady stream of different faces waltzing through the place where I live. I do not appreciate the pressure on resources, like the communal wash kitchen, which gets far more use since it suddenly has to serve commercial purposes, for which it's not intended. I don't appreciate the garbage lying around, the noise, the doors not locked and generally transient folks who don't give a shit about the place in which they live for a couple of days.

  Hotels and some city people want to focus on the fact that there is unfair competition going on but also seem to recognize that the model is a threat to their bottom line. 

It has nothing to do with that. It's a massive assault on the quality of life of the residents that actually live in such a house. Unless you never experienced that you really don't know how shitty such a situation can be.