Sometimes elements won't register onClick events in React unless you specify a tabIndex. Try this:

const checkClick = () => {
  console.log("It worked!!");
  setModalHotel(!modalHotel);
}

<img tabIndex={0} src="./assets/square.svg" alt="expand" onClick={checkClick} />

this will help you to debug whether the click event is actually being fired.

Side Note:

From an accessibility perspective, it's almost always preferrable to use either button or a elements to handle clicks like this. They have tabIndexes by default, and better a11y support in general.

Found the problem!

I had this z-index: -1; in my css, removed it and it worked.

You haven't really provided enough information to completely diagnose your issue. But in the meantime, here is a working snippet with an element that is clickable (a button) to toggle state using a useState hook. You can compare what is different between your non-working code and this working example.

const { useState } = React;

const Thing = (props) => {
  const [modalHotel, setModalHotel] = useState(false);
  return (
    <div>
      <h1>{modalHotel.toString()}</h1>
      <button onClick={() => setModalHotel(!modalHotel)}>Toggle</button>
    </div>
  );
}

ReactDOM.render(
  <Thing />,
  document.getElementById("react")
);

<script src="https://cdnjs.cloudflare.com/ajax/libs/react/17.0.1/umd/react.production.min.js"></script>
<script src="https://cdnjs.cloudflare.com/ajax/libs/react-dom/17.0.1/umd/react-dom.production.min.js"></script>
<div id="react"></div>