I would think towels and sheets are mostly just the cost of doing business.

However, if it were me I’d offer to pay for the sheets and pad. But I’d offer what I myself would buy. Reasonably priced sheets from Amazon for $30-40 and a mattress pad for $20-30.

My husband uses face medication that tends to bleach towels... we always travel with a white face towel of our own. However, once in a blue moon he accidentally ruins a host’s colorful bath towel. We usually just go to Walmart and buy a couple of towels and leave them behind with a note what happened. It’s never been a problem or point of contention... the hosts were usually just happy to have a couple of new towels.

$150 is excessive for a $35/night rental.