why people don't stay at AI hotels anymore In Altered Carbon

In Altered Carbon VR technology has evolved to become so convincingly realistic, that physical 'Hotels' have become obsolete.

In SE1 E2 “Fallen Angel” Po meets up with the other members of the AI Hotel Union who have renamed themselves the 'AI Management Union' and mention how Po's not been seen for 47 years. (His last customer)

It becomes clear in this scene that the other AI's do not share Po's fascination with humans. They believe humans are a “”lesser form of life". They do not like being 'enslaved' by the humans.

One of the AI's go on to say how his “VR Sexperience” is the business you got to be in.

“You need to get out of the business of serving humans Po, and into the business of 'serving up' humans. “- We're led to believe he runs a porn business or even snuff porn possibly as he uses 'live humans' as they are more realistic in their actions.

AI don't want to deal with the physical responsibilities of the real world. In Po's case with the shootout at the hotel S1 E1 he had to deal with and “Gunfire, dead bodies” and Maddie- “rats feasting on the corpses?”

With VR you can comfortably have any virtual experience from the comfort of your own slum-home for less money.