The short answer is to contact your local planning or zoning department and report the change in use from residential to commercial. But, before you call, you would be prudent to do what's suggested below first.
The long and detailed answer is:
Zoning regulates the use of land and the owner of the home next door has changed the use of his land from residential to a hotel which is a commercial use. Unless your jurisdiction's (city, county if your home is in unincorporated territory) zoning ordinance allows this kind of commercial use in your zoning district, your neighbor is violating the zoning ordinance and subject to daily fines. The first thing you have to do is identify the zoning district in which your neighbor's house is located -- if a zoning map is not available online, staff in the local planning department should be able to tell you which zoning district it's in. Then get hold of the zoning ordinance (often online or downloadable as a PDF file -- otherwise city staff should have a zoning ordinance you can examine; there may even be one at your local public library) and look at the list of permitted uses in the zoning district. Also look at the list of special or conditional uses. If a hotel is not listed as a permitted use or special use, your neighbor certainly cannot use his house as a hotel. If it's a special use, then your neighbor must apply for a special use permit. There will be a public hearing and you will be able to present evidence (photos, testimony) to show that your neighbor does not meet the standards for awarding a special use permit.
Now this could get a bit more complicated if you live in a resort community. The bottom line is that you will need to speak with your local jurisdiction's planning or zoning staff to determine whether or not this use is allowed at all or with a special use permit. If this use is not allowed, the local government should issue citations and a cease and desist order. Keep on the case and be vigilant. Competent staff will follow up. Incompetent staff -- and there an incompetent folk in every profession -- will not. Good luck.
The prior answer is correct, however you also need to consider your position as a neighbor. If you make a mistake, you could be making an enemy out of a neighbor. So my suggestion is to research not only what your neighbor can do with his property, but also to contact him directly to find out his reasons. In fact, you might also be in a position to help him manage the property if he is not local. That would give you authority to keep up the place and prevent your fears from coming true. But if you go that route, have a written contract.