Post: #1

It seems like in the last decade I've seen a rapid inflation of hotel prices far above the rate of inflation of the wider economy. Now it's pretty much a given that you are going to pay over $200 a night for a 3-4 star hotel even in second or third tier American cities. I remember going to NYC in 2002 and found a great deal paying several hundred for 3 nights at a hotel near Times Square. Now good luck finding anything in Manhattan for under $300 a night.

Is it just my imagination or have hotel prices gone gangbusters in the last decade at a rate far outpacing inflation?

Post: #2

I don't think the prices have gone up a whole lot, just inflation over the years. I think where they really get you is on the resort fees and taxes and assorted surcharges though. Those add up.

Post: #3

I think there are two main culprits. Taxes (as mentioned above) and the housing bubble that was never properly allowed to deflate, whereas Americans incomes have decreased or not risen enough to keep pace with the re-inflation of the housing bubble.

Post: #4

I remember in the 90s that Motel 6 was $25 a night, big cities have always been expensive but priceline's bidding system is pretty cool for getting a nice room in a big city. I've done Kansas City for $70 on weekends (P&L, Country Club Plaza, and Hallmark).

Post: #5

So real estate prices have *always* outpaced inflation, for one. Inflation is generally around 2.5%, while real estate growth nationally is around 8%. But the growth rate of prime cities is far higher than that even. Manhattan is 14% a year, which compounded over a decade is a lot of money. San Francisco is even higher.

The question shouldn't be whether or not hotels are outpacing inflation, but whether or not hotels are outpacing real estate appreciation. That's a statistic I'd love to see.

Post: #6

No idea why hotels are so expensive, but that's one reason I go for rental apartments, Airbnb and such.

Post: #7

I just pulled up the Hotel Pennsylvania next to Madison Square Garden. I've stayed there a long time ago, it's a certified shit-hole. I'd say it's worse than a motel 6. After tax a room there goes for $255 a night. And I'm guessing that's about a 1 or 2 star hotel. I don't even want to know what a week's stay at a 5 star hotel in Manhattan would cost.

So if you were to stay at that dump for one month, it would cost you $7650. But if you were to get a dumpy studio apartment in Manhattan I'm guessing it would cost around $2000-2500 in that same month. I just can't believe that the overhead at that hotel justifies 3x the rate of an apartment.

Post: #8

If I am traveling for leisure I look for nice hotel chains in smaller cities, like a W or Westin in a smaller city, you can usually get a room for under $150. I stayed in a W last weekend for $130. Deals are out there you just have to hunt. Hotel Tonight is a great app for that.

Post: #9

(05-02-2014 08:10 PM)speakeasy Wrote:  I just pulled up the Hotel Pennsylvania next to Madison Square Garden. I've stayed there a long time ago, it's a certified shit-hole. I'd say it's worse than a motel 6. After tax a room there goes for $255 a night. And I'm guessing that's about a 1 or 2 star hotel. I don't even want to know what a week's stay at a 5 star hotel in Manhattan would cost.

So if you were to stay at that dump for one month, it would cost you $7650. But if you were to get a dumpy studio apartment in Manhattan I'm guessing it would cost around $2000-2500 in that same month. I just can't believe that the overhead at that hotel justifies 3x the rate of an apartment.

Walking in the front door always seems to cost a lot more than booking online on any normal booking site not including the priceline type sites.

Post: #10

There's a reason why Airbnb is doing so well!

Post: #11

It's not your imagination Speak.

I can't speak for other states but in California, operating costs have skyrocketed.

In any hotel you have the following departments:

Housekeeping
Front Desk
Sales
Private Events
Food and Beverage
Security
Engineering
PR
HR
Accounting

For each one of those departments you need a manager. A decent manager in any one of those departments is going to cost you 6 figures, not to mention a hotel GM who is definitely clearing 6 figures. Then you need line level employees to staff all those departments which aren't getting any cheaper either, you need overnight staff which is a pain in the ass to find so you have to pay them more.

Then you have the cost of goods which has significantly jumped up in the last few years. The soaps, coffee, and all that little shit that hotels offer complimentary don't come free. Might only be a few cents here and there but it adds up.

From the consumer side, all you see is a bedroom to crash in or fuck a girl, maybe some crappy room service or a continental breakfast. There's a lot more behind the scenes that goes into the operation.

Post: #12

They can charge whatever they want damn near because until Airbnb there was no competition and almost no one is willing to sleep in a park or in their car. So if you travel out of town you're almost forced to pay for a hotel.

Post: #13

Are there decent hostels in the US? A great thing about Eastern Europe is quality hotels for low prices and hostels for absolutely dirt cheap prices. If you want a bed for a night and don't mind sleeping in a dorm you can get a place to crash for 6 bucks.

The dirty secret to the rising hotel prices (among other things like food) is that the inflation rate is much higher than the official numbers. If you calculate inflation based on how it used to be calculated 30 years ago the real inflation rate for the last three years has been around 15% a year. The other dirty secret is that deflation is good for just about everybody except for the very wealthy.

I've put most of my money into metals, so, I'm kinda ready to see it all burn. I don't want people to get hurt, but things are going to have to reset and I would rather it happen quickly now than for the US (and in extension the world) to keep slumming along, as its economy and industry gradually hollows out and dies.

The US (through our status as the world reserve currency) has been living like a parasite from 2003 onward, exporting our inflation and not really producing anything besides for the shale oil boom.

That's my opinion though. Other commentators here on RVF believe the economy is undergoing a "recovery" and that the US is a capitalist mecca with no structural problems. I would argue they are letting their politics (generally Obama supporters) cloud their judgement of a situation in which Obama maybe a factor, but really these problems landed on his lap. Obama decided to postpone the inevitable through QE for lots of reasons, but the fact is his policies are simply a postponement. When the chickens come home to roost, 2014-2018?, is anyone's guess, but judging from current events I say sooner rather than later.

Post: #14

(05-02-2014 06:22 PM)JJJames Wrote:  So real estate prices have *always* outpaced inflation, for one. Inflation is generally around 2.5%, while real estate growth nationally is around 8%.

   

http://www.shadowstats.com/alternate_dat...ion-charts


"Why are hotels SO expensive?" Inflation going up. Wages going down. Government lying about both.

Post: #15

(05-03-2014 12:15 AM)Tail Gunner Wrote:  "Why are hotels SO expensive?" Inflation going up. Wages going down. Government lying about both.

But the thing is you'd expect wages going down(relative to inflation) to put a damper on hotel prices since travel is peripheral activity. People travel more when the economy is doing well. After all someone must be paying $350 a night for Manhattan hotels or they'd all be out of business.

Post: #16

(05-03-2014 01:25 AM)speakeasy Wrote:  

(05-03-2014 12:15 AM)Tail Gunner Wrote:  "Why are hotels SO expensive?" Inflation going up. Wages going down. Government lying about both.

But the thing is you'd expect wages going down(relative to inflation) to put a damper on hotel prices since travel is peripheral activity. People travel more when the economy is doing well. After all someone must be paying $350 a night for Manhattan hotels or they'd all be out of business.

Prices fall in a deflationary environment, not an inflationary one. Hence, the chart that I posted showing that the government is lying about inflation.

The definition of stagflation is stagnant economic growth, high unemployment, and high inflation. High unemployment results in falling wages.

Post: #17

Quote:But the thing is you'd expect wages going down(relative to inflation) to put a damper on hotel prices since travel is peripheral activity. People travel more when the economy is doing well. After all someone must be paying $350 a night for Manhattan hotels or they'd all be out of business.

Corporate profits have been escalating...

Post: #18

The rich still have no problem to pay high prices. And if the hotel can get ONE customer paying 350 dollars a night, it sill makes more money than having THREE customers paying 100 dollars a night each.

Post: #19

(05-03-2014 01:25 AM)speakeasy Wrote:  

(05-03-2014 12:15 AM)Tail Gunner Wrote:  "Why are hotels SO expensive?" Inflation going up. Wages going down. Government lying about both.

But the thing is you'd expect wages going down(relative to inflation) to put a damper on hotel prices since travel is peripheral activity. People travel more when the economy is doing well. After all someone must be paying $350 a night for Manhattan hotels or they'd all be out of business.

You're forgetting the demand side.

Cheap overseas flights have meant a lot more Europeans visit NY. In fact, almost everyone I know have been in New York, even those who are not exactly cultured travelers. That's part of the reason. A lot more travelers from all over, a lot of new groups too. Chinese, Russians, Koreans.

Regulation of course also always brings prices up. Everything the government regulates gets more expensive.

Post: #20

(05-03-2014 12:15 AM)Tail Gunner Wrote:  

(05-02-2014 06:22 PM)JJJames Wrote:  So real estate prices have *always* outpaced inflation, for one. Inflation is generally around 2.5%, while real estate growth nationally is around 8%.

http://www.shadowstats.com/alternate_dat...ion-charts


"Why are hotels SO expensive?" Inflation going up. Wages going down. Government lying about both.

"Inflation going up?" Inflation is lower than it's been for a while. 2010 to 2012 inflation is 2.29%.

http://inflationdata.com/Inflation/image...ade_sm.jpg

Wages aren't going down, adjusted wages are more or less the same. The rich are getting richer, but the poor aren't getting poorer.

Post: #21

NYC is a special (expensive) case being that the two top cities in the Anglosphere world for live Theater are London and NYC ... turns out NYC is consistently and year round one of the top North American Tourist Destinations (Theater plays all year) with Broadway, Off Broadway and several more Offs along the way lots of seats to fill and rooms to book (or bang) after.

In Boston where I have been working on a Bank Cyber Security contract since last November recently extended to the end of June 2014 I have learned that the advertised room price is always flexible if you are flexible ... I have learned that 99% of the local 3, 4, 4.5 star hotels and occasional a top line Five Star Hotel are quietly buying into the free markets - in Boston there has been a boom in new hotels construction supporting the new Convention center leading to some crazy Pricing... for instance Fenway park home opener saw 3 stars trying to get $299 and 5 stars as much as $800 per night ... same day but after game over Friday night Priceline and Hotwire sites prices dropped dramatically one four star within walking distance to the office dropped from $299 to $110 (plus $25 fees and taxes) so I booked it - I booked 5 NorEaster Snow Blizzard nights for an average of about $110 INCLUDING the taxes and fees.

Then priceline sent me a $25 coupon to try a name my own price deal - normally I just book the express deals for my city zone and minimum star rating and take the best deal (Hint search and sort by star rating and note their city zone on priceline then when you book an express or better - name your own price deal you will have a strong idea of the exact hotels in your selected zone - I made a name your own price $70 plus $23 Taxes and fees deal at the famed Omni Parker House (Usual price $279 for 4 stars room but they have 551 rooms so the overhead ticks on operating these places and EMPTY rooms in between major events or conventions means LOST revenue so the best 3 and 4 stars are eager to take even a name your own price deal and you can restrict by Zone and Star rating - they will demand that you expand to lower stars and extra zones but that demand is currently resent when you log out and log back in... So being the cheap SOB I am when it comes to paying for a stack of sheets and shower for 10 hours use I normally start offers at $50 for 4 stars min and go up at $10 increments and will sometimes go as low as 3 stars (Never 2 stars or below was almost scammed by a slimey Boston 2 star for work normal 3 and 4 stars will put a $50 standard room charge on your debit... Even if they say credit only they all accept Debit cards in my experience) or accept a $50 Cash deposit against you emptying the mini bar or stealing all the Sheets and towels and pulling a Chew and Screw. The slimeball two star tried to say I owed them another $69 and busted my chops about return of my $150 cash deposit - a total Nigerian run Scam Operation with well know Nigerian scam tactics.. I said if I do not have my cash deposit back in full in 5 minutes I will be calling priceline to have them blackballed - they complied off I went with a Zero Balance and my receipt for a $79 dollar two star dump room.

So in summary I got two 4 star name my own price deals for $70 plus $23 fees and taxes, one $110, a couple of $95 all name my own price deals from Hotels advertising $299 to $599 a night!

I was getting quotes via both the Priceline and Hotwire.com APPS but wound up only using Priceline for my last 8 stays in Boston and except for a bit of star system rating creep (i.e. A couple four stars I would only rate 3.5 stars) with Friday Saturday "Name your own Price deals being quite plentiful. Got to love free markets and every 3, 3.5, 4 and 4.5 star hotel only took a $50 Debit Card or Cash deposit and returned it immediately upon next morning Checkout. You go in with your Smartphone show them your electronic receipt and reservation number - they collect a $50 room deposit and give you 2 keys ( important when you rendezvous with your bang biscuit later and give her a proximity electronic card key so she can flash it and proceed right to your room where you will be waiting cranked up hot and ready to go.

Post: #22

(05-03-2014 08:11 PM)JJJames Wrote:  

(05-03-2014 12:15 AM)Tail Gunner Wrote:  

(05-02-2014 06:22 PM)JJJames Wrote:  So real estate prices have *always* outpaced inflation, for one. Inflation is generally around 2.5%, while real estate growth nationally is around 8%.

http://www.shadowstats.com/alternate_dat...ion-charts


"Why are hotels SO expensive?" Inflation going up. Wages going down. Government lying about both.

"Inflation going up?" Inflation is lower than it's been for a while. 2010 to 2012 inflation is 2.29%.

http://inflationdata.com/Inflation/image...ade_sm.jpg

Wages aren't going down, adjusted wages are more or less the same. The rich are getting richer, but the poor aren't getting poorer.

You can lead a horse to water . . . but you can't make him swallow the red pill. Did you bother to check out the link that I provided?

You are simply citing government statistics, which are a lie. They have no basis in reality. That is why I posted the real statistics based on the government's own inflation formula that it used before 1980 (before the government began to lie about inflation . . . and unemployment . . . and everything else).

The real inflation rate is about nine percent.

Post: #23

Tail Gunner has tried pulling up that conspiracy site as a legitimate source before. Like most conspiracy kooks they get some things right but end up adding so much of their own conjecture that in the end most of their "resources" are garbage. The notion that the government can lie about inflation while the rest of the world's economies wouldn't catch on is hilarious.

Personally I say it's not really worth arguing with someone that is not using the same figures that everyone else recognizes.

Post: #24

(05-04-2014 07:14 AM)Vicious Wrote:  Tail Gunner has tried pulling up that conspiracy site as a legitimate source before. Like most conspiracy kooks they get some things right but end up adding so much of their own conjecture that in the end most of their "resources" are garbage. The notion that the government can lie about inflation while the rest of the world's economies wouldn't catch on is hilarious.

Personally I say it's not really worth arguing with someone that is not using the same figures that everyone else recognizes.

Well said.

Post: #25

(05-04-2014 07:14 AM)Vicious Wrote:  Tail Gunner has tried pulling up that conspiracy site as a legitimate source before. Like most conspiracy kooks they get some things right but end up adding so much of their own conjecture that in the end most of their "resources" are garbage. The notion that the government can lie about inflation while the rest of the world's economies wouldn't catch on is hilarious.

Personally I say it's not really worth arguing with someone that is not using the same figures that everyone else recognizes.

It's not really lying if you change the definition. The new definition of inflation would then simply be accepted by scholars and others. If there was a lie it would be saying that the two numbers are similar.

For what it is worth, I also think the inflation numbers are cherry picked. Why is housing and rent prices not included in inflation numbers?

Look at this table showing rent as percentage of income:



We spend way more now on housing than before. That IS inflation.

http://www.zillow.com/research/rent-affo...13q4-6681/

What about gas prices?

"...The Energy Department’s statistical arm reported Monday that the average household spent $2,912 for gasoline in 2012, which makes up almost 4 percent of pre-tax income, tying 2008 for the highest percentage in roughly 30 years..."

http://thehill.com/policy/energy-environ...z30kunpPeI