Okay so I'll take your word for it that it's normal. It doesn't matter either way. If the provider doesn't like it they don't have to host it. Plain and simple. We don't have to serve every childhood normal behavior. It's our house and our rules and if we don't want a kid with their hands down their pants then we can just say no to THAT behavior. No need to talk to the kid or explain that it can or can't be done here or there. Just block it and be done with it. Simple clothing fix.
I don't host fixations I don't like. I definitely do not want my three year old or four year old kids going home and telling thier parents that another kid is putting hand down or rubbing their private area during nap. Bad for public relations regardless of whether or not it is normal or not. This is a GROUP of kids and the child is in PUBLIC when they are in that group.
No need to debate whether or not it's normal. I personally don't think it is but it doesn't matter either way. Only question is "do you offer that service" or do you not? I don't offer that service here. I want the kids to keep their hands out of their pants. That's the service I feel comfortable offering.