To me, it seems like their business case is very dependent on rapid reuse. With this in mind, using a hybrid engine that would need to be replaced every flight seems very counter intuitive vs a liquid one which seems like it would be much easier to maintain. What factors (liquid storage, specific impulse, design time, etc...) caused them to make this decision?
The book Burt Rutan's Race to Space by Dan Linehan describes why the predecessor of Spaceship Two chose a hybrid engine.
- Rutan ruled out solid motors because they cannot easily be shut off (a safety concern).
- He ruled out liquid motors because of cost and complexity.
Rutan settled on a hybrid engine as the best compromise between safety and cost. Also
Spaceship One could get away with having a less efficient or a less effective rocket engine.
When Spaceship Two was being designed and built, this was also done by Scaled Composites, and presumably the same logic held. The follow-on vehicle, while incorporating many design changes, was essentially a scaled-up Spaceship One.
Since then, the engine has been redesigned quite a bit and Scaled Composites is no longer building the vehicle. It's a fair question whether the same choice would be made today given hindsight. A vehicle designed to win a prize and then be retired has significantly different requirements than a passenger vehicle.