Its been more than 10 years since we were last in Italy. Do the Italian hotels still take your passport upon checking in?
Yes, they do need to see it, but my most recent experience (4 trips to Italy in last 2 1/2 years) is that they either make a copy of it and hand it right back to you, or write down the information in it that they need, and then hand it right back to you.
Its Italian law. They may hold it for a short time if they are busy checking others in. You can hang around the front desk until they get a chance to make a photocopy and can give it back to you. It freaks some people out, I don't know why.
Yes, they make a copy of all guests’ passports, not just who rented the room but all occupants of the room. We always got our passports back immediately.