Yes, it’s called ‘translation convention’, which may or may not always be accurate. It’s kind of like rendering Iakovos as ‘James’ or Yam Suph as ‘Red Sea’; both are not a totally faithful transliteration/translation of the original words (else you would have ‘Jacob’ or ‘Reed Sea’), but because of the general hesitancy among translators to break with centuries of translation tradition (and also perhaps to avoid any complaints about the ‘unconventional’ renderings) they usually prefer to just keep it.
Funny thing is, the ancient versions don’t really translate it as ‘inn’ also (as in commercial public house): the Syriac Peshitta says that Mary put the baby in the manger “because there was no room where they could lodge;” the Latin Vulgate uses the word diversorio both in the Nativity and the Last Supper, a word which like katalyma has more general connotations than inn (while using taberna for pandocheion in 10:34). It was really William Tyndale that started the “inn” fad in English Bibles (katalyma = ynne, just chamber; pandocheion = commend lynne); Wycliffe translated the Latin diversorio as chaumbir (Bethlehem)/herborgerie (upper room) and taberna as ostrie. (Here the Rheims NT unfortunately obscures the difference by using inne in all three instances).
