In Germany there is no passport check in hotels when checking-in. In addition to that private people (like merchants, hotel clerks) are not allowed to see the passport or ID card. As it is stated in § 1 of the German "Personalausweisgesetz" they have no "Ausweisrecht" (right to ask you for the passport or ID card)
Not quite true. You cannot be forced into leaving your ID card with someone, but they can still ask to see your ID. The law you cite only applies to ID cards, not passports.