Purely a case of making as much money as possible from the franchise. LOTR had been split into 3 movies (which it needed) and all 3 had been box office hits, bringing in tons of cash. Why wouldn't they do the same with the next one? It also suited the ambitions of the writers and director; as we saw with the LOTR they decided that they knew better how to make a good story than the author by changing important aspects of the original novels. Obviously they thought they could improve upon The Hobbit as well.
For anyone who loves the book, the movie is so far removed from what Tolkien intended, and I'm pretty sure that he would not have been too happy with how it panned out. There are some good touches in there such as casting Billy Connolly, Ian Holm, Eddie Izzard, Stephen Fry and Benedict Cumberbatch. But expanding - or more precisely bloating - the original story far beyond it's original mandate was just plain wrong.
It's quite ironic really; usually our criticisms of movies is that they leave too much out - this was a case of putting too much in.
As for other directors (and I know there was plenty wrong with his Fellowship movie), but I would like to have seen a Ralph Bakshi rotoscoped version of The Hobbit.