Airbnb undermines the distinction between short-term, "hotel", accommodation and and long-term, "apartment" accommodation. Some people seem to figure this is a bad thing. New York State legislators, for example, have passed legislation imposing heavy fines on anyone listing their entire apartment on Airbnb or a similar service. But what – if anything – is wrong with what Airbnb is doing?
The distinction between hotels and apartments has always been artificial. Even before Airbnb, people turned their homes into bed and breakfasts, and other types of small hotels. Similarly, hotels have been used for long-term accommodation, either by individuals choosing hotels as their long-term residence, or by companies who have converted whole hotels into student residences or assisted living facilities.
The artificial segregation of the rental market into hotels and apartments evolved, and has been maintained, because market segmentation has been both possible and profitable. The hotel market separates itself from the apartment market through the services it offers (providing daily housekeeping instead of a washing machine), the terms on which it makes accommodation available (no background checks on tenants), and the prices it charges.