Why Hotel Rooms Are So Pricey, and Some Chance That Could Change (Slate)

The prices of hotel rooms have several economic factors pushing them higher than the average cost of a nearby apartment, if one were to break down monthly apartment rents to cost per night. Local taxes that treat long-term homeowners more favorably than transients, the premium location of many hotels in convenient business districts, and hotel guests who generally do not drive hard bargains (unlike apartment hunters), all contribute to expensive hotel rates, Matthew Yglesias of Slate explains.

But the rise of companies such as Airbnb, which turns apartments or spare rooms into temporary accommodations for travelers, could put more pressure on hotels to alter their prices. “Airbnb doesn’t eliminate the market dynamics that tend to push hotel prices up, but it does at least create countervailing pressure,” Yglesias writes. “One possibility is that hotels will get cheaper in response.” That would be the good outcome. The bad one? “Another is that the share of the market held by formal hotels will simply shrink somewhat. In that scenario, traditional urban hotels would come to specialize even more narrowly in business travelers and high-end tourists, and average prices would go even higher.”

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