I'm a UK citizen. I'm very security conscious when it comes to identity fraud and absolutely hate my passport being copied by hotels. Eg, booked a holiday package for family through a major UK travel agent so all paid for prior to travel. We got to hotel and it insisted that it was normal for them to copy all passports. I would have stood there and had an argument but my teenage daughter asked me not to. So the hotel ended up copying all of them, including kids' passports. They also got me to fill in those 'official' forms which ask for full address (didn't give full address, just town/city/area/country). Is is normal for hotels in Spain to do this?
Yes, it is normal, and happens to everyone I know so it is not peculiar to UK travelers. And because very few people raise a fuss they continue to do this, because it happens to be illegal and heavily discouraged by experts for the reasons you know.
But nobody gives a hoot so it is normal.