Since you are in the Italian Alps (wish I was right now), I know US copyright laws would not apply. And I am sorry to say, I am not familiar with Italy's or EU's copyright laws. That being said, generally one cannot use another company's name in a way where they profit without the consent of the owner of the name. I know many affiliate programs do not allow you to use their name in meta tags, as an example.
Unless someone else on WebmasterWorld chimes in with advice, I suggest starting with your country's copyright laws and, subsequently, contacting owners of businesses and notifying them when their company name is being used.
I would be remiss if I did not add that this could cause you a lot of headaches, so I suggest treading lightly. And remember too, this is not legal advice, just an opinion.
Marshall
We have basically one choice in picking an Internet Service Provider.
Why? There are several Italian ISPs available.
Are you referring to web hosting services?
However most of the hotel owners subscribe to his service because they feel that they have no other choice.
Just as easily as you have posted here the hotel owners could use alternative hosting providers and create their own web sites if they wanted to.
I visit Italy a lot and know many hotels that have their own web sites however I must admit there are a lot of extremely good Italian hotel directory sites.
he now uses the name of the hotel along with other keywords
This is very common on all hotel web sites, how else would they promote them in the search engines?
It is like (tell me if I am wrong) stopping the mailman at the entrance of an apartment complex and taking the mail than redistributing it to the tenants asking a fee for receiving the mail.
Not really, why shouldn't the directory charge a fee for services they are providing in promoting a hotel, after all, his charge is optional, he's not forcing anyone to subscribe.
How much does he charge for this service Euro 10-20-100 per month?
My non-legal opinion would be that so long as he does not attempt to pass himself off as the owner of all these hotels that he would be seen to be what he is, a directory provider. After all, what difference is there between what he offers and pagine gialle (yellow pages)?
Marshall
web hosting service has registered a web site www.xzx.com
words used in the description are almost the same as mine.
However, there is absolutely nothing to stop anyone else, including you, to take him on and provide a similar, but better (and posisbly cheaper), service. Instead of registering thousands of domain names, especially since he's already done that, pick a good domain name and just make hotel pages on that domain.
Probably a DMCA issue [copyright.gov...]
I would have thought that a direct complaint to Google with all your pertinent details etc would possibly have them doing a manual review and definitely so if this has been done for several hotel sites therefore you'll need to get everyone organised and co-ordinated to present a complaint en-masse!
However it is also possible that one very strongly worded letter from a local lawyer to the "smart guy" with a copy to his ISP/hosting company may also have the desired effect!