"daughters aren't subletting though - neither lives there nor pays "rent" to their parents."

Neither of these conditions defines a sublet, though. There are listings in my area for BnB where the person running the operation has leased a lot of properties in the downtown core just for this purpose. It could be that between the income and operating expenses, the Net is being kept by the person doing the operation. Which, being active, makes this Sched C activity, of course.

Second homes have no tax reporting benefit to the owner, under most conditions, anyway. Not being the person running your property as a BnB doesn't change that for this owner.