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Who ever handed over a passport to a hotel. Thats what driving licences are for or a photocopy or a bank card.
So many people. Certain Latin American countries require it, or did at one point. Think back just 10 years before everything was online and most places accepted bank cards. If you didn’t play ball you could find yourself in a right spot.
I haven’t seen the sources for those claims, but it seems to me to be half truths. Technically an issuing government can forbid the holder from doing anything with the passport, including send it away for immigration purposes, but it would be unusual.
In theory, since national passports are the property of their sovereign issuer, foreign governments can’t impound or retain them either. However, it is understood that foreign governments can require the document to be sent to them for visa and other purposes.
In practice, retention happens a lot, like in US court cases where there’s a flight risk and the judge doesn’t care about breaking international treaties, or when hotels keep travellers documents to guarantee payment for a room. Is it legal? Very likely not, but it’s normal.