Am I Rude or Unkind as a host?

Here is the situation. we have visitor for the whole week. They not really visit us, they just want to stay with us because they don't want to spend money to stay in a hotel (I think) They've been staying for 5 days now, and only had dinner once with us. I cooked and made my own dessert. Anyway, after dinner she went outside to smoke cigarette. I said please do it where my neighbor can't see you. She said, why should I care, I don't smoke her ****!. I reply, I do care very much, they my neighbor, they have 3 kids and we live in an upscale neighborhood, you don't see anybody ever smoke. They all have children, teens and always talk about how bad and addictive cigarette is. After that night, I don't feel very comfortable anymore. By the way, I don't know them very well, it just happen to be my husband second cousin. Even my husband doesn't have any close relationship with them. We never invite them. They asked, weather they can stay with us during their visit. SO, AM I RUDE ?