Out of state STR

[Kayl Kam]

I live in Illinois where it is not airbnb friendly. I am thinking of getting STR in Indiana within 1 hr driving distance from Illinois. I am looking for a property in a good but relatively affordable neighborhoods like Crown Points. I also noticed that I need to get a permit to run airbnb in Indiana which is less painful than the restrictions in Illinois. I have a few questions at this point.

1. If I want to use the STR tax loophole, would living in a different state affect the advantage of the so called STR tax loophole, as long as I remain active in managing the property and fulfill the other requirements?
2. Are there other neighborhoods in Indiana that I can do some research on that is within one hour driving from say Joliet, IL, other than Crown Point and Cedar Lake? 
3. What makes people prefer airbnb than hotel these days, especially the rate of hotels are relatively competitive (airbnb becomes more expensive than it used to be), i.e. is it still a viable business for the most part? 

I am just starting out the investing journey. Please bear with me if these questions are too basic. Thanks in advance!