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(Slate)   Why do hotel rooms cost so much more than houses or apartments?   (slate.com) divider line 70
    More: Obvious, TPM Media, Matthew Yglesias, commercial real estate, tax deductions, excise taxes, apartments, central business district  
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10368 clicks; posted to Main » on 27 Nov 2012 at 10:21 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-11-27 10:22:38 AM
Because sex stains and sticky tv remotes aren't free.
 
2012-11-27 10:22:42 AM
Supply and demand.


/ next question, please
 
2012-11-27 10:24:13 AM
Because they can
 
2012-11-27 10:26:25 AM
I think if it had daily maid/laundry service apartment costs would be comparable. There is also the wear and tear factor, people won't treat a hotel room the same way they treat there own home. It is the same reason renting a car for the weekend would be higher than a monthly car payment.
 
2012-11-27 10:26:25 AM
Because MAID SERVICE /OVERHEAD biatchES
 
2012-11-27 10:26:51 AM
Really? 1000 people asked that?
 
2012-11-27 10:27:42 AM
I rent a 2bdrm Cabin w/fireplace, w/d, 1ba. $650 per month, Oct-April. May 1st it becomes a vacation rental for the summer, and goes for $400 per night.

Tourism... how does it work?
 
2012-11-27 10:27:50 AM
.... that question had to be asked? (reads article) and it's not even in relation to the serious question of poor and non-creditworthy families having to use hotels because motels as primary residences because they don't have steady income and many corporate places won't take you if you have a bankruptcy/eviction/bad credit???

what a '53%ers/first world problems' article.
 
2012-11-27 10:28:45 AM
ricromera.jpg
 
2012-11-27 10:29:08 AM

sulco: Because sex stains and sticky tv remotes aren't free.


Came for this
 
2012-11-27 10:31:00 AM
'Cuz bend over, that's why!
 
2012-11-27 10:32:07 AM
I managed a Residence Inn about 15 years ago. At that time it cost us $7.00 to clean a one bedroom or studio suite and $15 for a 2 bedroom suite. When it got late I'd sell one night stays to walk ins as low as $29.

If you walk in to a hotel at night ask if they are full, ask for best available rate and then ask if they can go any lower since its getting late. They will.
 
2012-11-27 10:32:20 AM
Cuz it's a real pain in the ass to buy a house or rent an apartment if you're only staying a few nights?
Here's another shocker - renting a car is MUCH more expensive than buying if you crunch the numbers and avoid the logic.
 
2012-11-27 10:34:39 AM
Because the owners want to make money?

/DNRTFA
 
2012-11-27 10:36:52 AM

SweetSaws: Came for this

That's

why the remote's so sticky.
 
2012-11-27 10:38:56 AM
"...and more than 1,000 of you are so farking stupid that you wanted me to explain why hotels are so expensive."

FTFT
 
2012-11-27 10:40:15 AM
A old rule of thumb for the hotel / rent price is, "a hotel room is 10% of a months rent."
And it seems to work pretty well.
 
2012-11-27 10:40:23 AM
Hotels simply have a monopoly in major tourist cities. You have no other options of where to stay.

In a city like Paris, $250/night will get you something smaller and dingier than a Hampton Inn at half the cost in most American cities. And during peak tourist season, the prices are even more extreme -- I've stayed at W Hotels in the US for less than what total crap holes in Paris wanted per night in the late spring. And that's what really gets me -- it's a slap in the face to charge so much money for a hotel that's falling apart.

Last time I was in Paris I rented a studio apartment for 14 days at 400 euros/week. It was larger than any hotel in the sub $400 price range, had a full kitchen, laundry was around the corner, and a supermarket was in the bottom floor.
 
ZAZ [TotalFark]
2012-11-27 10:43:38 AM
Because any hotel that charges less than $50 per night is no better than sleeping in my car. Personal observation.

It makes more sense to take my 15 spare rooms and directly market them to price-sensitive customers by using a specialized reseller like Hotwire.

There's a lawsuit alleging that hotels imposed minimum price rules on resellers.
 
2012-11-27 10:44:14 AM
I really detest the author Matthew Yglesias.

I once heard him described as a guy who as an undergraduate could dominate conversations in the Harvard dining halls and who hasn't progressed past that level of clever superficiality.
 
2012-11-27 10:47:32 AM
I've worked in corporate meeting/special event planning for four years now. Hotel prices (depeding on location) will shock the hell out of you. I'm not just talking rooms here; EVERYTHING is farking expensive in some cities.

We've had meetings where an apple would cost $5++ (plus tax/gratuity) or a gallon of coffee is $130++. I used to be shocked by the pricing, now I have to see $50 for coffee as "cheap".

Why is it so expensive? Because it can be and they know we'll pay whatever they ask (mostly).
Unfortunately, it's the cost of business unless you want all of your meetings at the Motel 6 in Omaha.
 
2012-11-27 10:49:02 AM

thornhill: Hotels simply have a monopoly in major tourist cities. You have no other options of where to stay.


That is awesomely wrong. Awesomely.

'Hotels' are a category containing multiple separate fungible competing entities, information about pricing and quality being freely available,. They are close to the perfect opposite of a monopoly.
 
2012-11-27 10:49:50 AM

mechgreg: I think if it had daily maid/laundry service apartment costs would be comparable. There is also the wear and tear factor, people won't treat a hotel room the same way they treat there own home. It is the same reason renting a car for the weekend would be higher than a monthly car payment.


Maids are paid minimum wage; that's probably the least of their labor expenses.

As for laundry, even high end hotels (e.g. the W) now request that you do not ask for new towels during your stay so to conserve energy.

As for wear and tear, I think most hotels defer as much maintenance as long as possible so they can renovate all of the rooms at once, making the maintenance more cost effective.
 
2012-11-27 10:50:20 AM
I'd say because electricity, water, cable, furniture, televisions, towels, and soap are not typically included in rent/the purchase of a house... and the article doesn't even mention those obvious costs.
Conclusion: This article, while fully unnecessary to begin with, sucks.
 
2012-11-27 10:52:40 AM
Tiny soaps and shampoo, those things aren't cheap.
 
2012-11-27 10:54:42 AM

Tigger: thornhill: Hotels simply have a monopoly in major tourist cities. You have no other options of where to stay.

That is awesomely wrong. Awesomely.

'Hotels' are a category containing multiple separate fungible competing entities, information about pricing and quality being freely available,. They are close to the perfect opposite of a monopoly.


If you don't think there is any kind of collusion when it comes to pricing I have a bridge to sell you.
 
2012-11-27 10:55:50 AM

Gaboo: I'd say because electricity, water, cable, furniture, televisions, towels, and soap are not typically included in rent/the purchase of a house... and the article doesn't even mention those obvious costs.
Conclusion: This article, while fully unnecessary to begin with, sucks.


THIS

Lot of fluff and not actual costs mentioned in the article.
 
2012-11-27 10:55:59 AM

thornhill: mechgreg: I think if it had daily maid/laundry service apartment costs would be comparable. There is also the wear and tear factor, people won't treat a hotel room the same way they treat there own home. It is the same reason renting a car for the weekend would be higher than a monthly car payment.

Maids are paid minimum wage; that's probably the least of their labor expenses.

As for laundry, even high end hotels (e.g. the W) now request that you do not ask for new towels during your stay so to conserve energy.

As for wear and tear, I think most hotels defer as much maintenance as long as possible so they can renovate all of the rooms at once, making the maintenance more cost effective.


Kind of doubting that altruism
 
2012-11-27 10:56:24 AM
I was recently in NYC. As far as we could tell it's basically impossible to stay anywhere near Times Square on NYCM weekend for less than $300 per night, so I'm getting a kick.
 
2012-11-27 10:58:53 AM

mechgreg: I think if it had daily maid/laundry service apartment costs would be comparable. There is also the wear and tear factor, people won't treat a hotel room the same way they treat there own home. It is the same reason renting a car for the weekend would be higher than a monthly car payment.


Being in the temp housing biz for many years... this is certainly part of it. Vacancy costs are another part that they left out of TFA. Vacancy throughout the year at a hotel is going to be a lot higher than at an apartment building. And every day a unit at either one is vacant it costs a lot more money than you might think.
 
2012-11-27 10:59:36 AM

thornhill: Tigger: thornhill: Hotels simply have a monopoly in major tourist cities. You have no other options of where to stay.

That is awesomely wrong. Awesomely.

'Hotels' are a category containing multiple separate fungible competing entities, information about pricing and quality being freely available,. They are close to the perfect opposite of a monopoly.

If you don't think there is any kind of collusion when it comes to pricing I have a bridge to sell you.


Even if I grant you there is pricing collusion they are STILL not a monopoly.

In fact if you have two or more companies colluding on price guess what that cannot possibly be?

A monopoly.

(On a separate note the likelihood of pricing collusion is miniscule - not least as evidenced by the different prices - however collusion itself necessarily precludes the possibility of a monopoly so we need not address how silly that idea is).
 
2012-11-27 10:59:42 AM

awfulawful: Really? 1000 people asked that?


This is exactly what I came to say.
 
2012-11-27 11:00:10 AM
What I want to know is, why the fark is it that the more expensive the room is, the less free incidentals or services you get? Yet cheap hotels fall all over themselves to give it to you? Makes no damn sense; If I'm paying $300 a night for a bed, I'm not paying $20 a day for farking wifi access.
 
2012-11-27 11:00:56 AM

thornhill: mechgreg: I think if it had daily maid/laundry service apartment costs would be comparable. There is also the wear and tear factor, people won't treat a hotel room the same way they treat there own home. It is the same reason renting a car for the weekend would be higher than a monthly car payment.

Maids are paid minimum wage; that's probably the least of their labor expenses.

As for laundry, even high end hotels (e.g. the W) now request that you do not ask for new towels during your stay so to conserve energy.

As for wear and tear, I think most hotels defer as much maintenance as long as possible so they can renovate all of the rooms at once, making the maintenance more cost effective.


The labour expenses for maids are low but they are there. I mean if when I lived in my apartment I hired a maid to come every day for an hour, and only paid minimum wage it would probably cost me a few hundred bucks a month (assuming I could find anyone to work for an hour a day for minimum wage). There is also the cost of the person actually booking the room. With an apartment, you meet with the manager before you move in and spend some time signing forms. Then you are there for at least a month, maybe a year, and after they spend the time signing the forms, ideally all they do is collect your cheque each month. With a hotel they are potentially renting the same space out to someone every day.

I agree they defer the maintenance, but I think most people are going to go a lot easier on things like carpets, beds, and bathroom fixtures if they know they own them. In your house you are probably going to take a lot of care to make sure you don't spill food on the carpet or furniture, but in a hotel most people probably don't care as much.
 
2012-11-27 11:02:16 AM
I suppose cleaning up dead hookers could get pricey.
 
2012-11-27 11:02:49 AM

thornhill: Tigger: thornhill: Hotels simply have a monopoly in major tourist cities. You have no other options of where to stay.

That is awesomely wrong. Awesomely.

'Hotels' are a category containing multiple separate fungible competing entities, information about pricing and quality being freely available,. They are close to the perfect opposite of a monopoly.

If you don't think there is any kind of collusion when it comes to pricing I have a bridge to sell you.


There isn't the collusion you're imagining. I worked for Marriott for many years and not only are hotels competitive against each other, but the brands within the company even compete against each other! It sucked to find out the Residence Inn down the street was undercutting us for the same clients, but it absolutely happened.
 
2012-11-27 11:04:13 AM

santadog: I rent a 2bdrm Cabin w/fireplace, w/d, 1ba. $650 per month, Oct-April. May 1st it becomes a vacation rental for the summer, and goes for $400 per night.

Tourism... how does it work?


Where do you live April thru may then? Do you have to find a new place every time?
 
2012-11-27 11:10:36 AM

mechgreg: I think if it had daily maid/laundry service apartment costs would be comparable. There is also the wear and tear factor, people won't treat a hotel room the same way they treat there own home. It is the same reason renting a car for the weekend would be higher than a monthly car payment.


It's not just that, it's occupancy rates too. Some hotels cater to people traveling on business and it can either be feast or famine for them. It's sort of hard to predict especially in the long-term.

And I don't really care so much about cleaning day to day. I don't change my sheets or wash my towels at home daily, but most hotels do that for you. Some have adopted policies that if you want fresh towels throw your old ones on the floor, otherwise hang them up. That makes sense to me, but I sure as hell do not want to use someone else's towels or sheets if they haven't been washed when I check into a hotel.

I'm not really sure about the "wear-and-tear" factor. I'm not too harsh on hotel rooms. I'm not Joe Walsh during the '70s. I don't have accountants to pay for it all.

Also, people put up with way too much shiat. I once tried to convince a former employer (former by my choice, not theirs) that they should stop sending people to a certain hotel (employees, customers, potential investors) because of a very bad experience that IMO was inexcusable but they didn't really care. Basically the hotel staff told me to fark off because the guy at the front desk was friends with a bunch of high school kids who were whooping it up and when I threatened to call the cops they cut off my local phone service - the asshole didn't count on me having a cell phone and the cops broke up the party and I was finally able to get some sleep.

It's also very much supply and demand - The most expensive hotel room I ever got was in the French Quarter in New Orleans during Jazz Fest which also happened to be hosting a liquor industry convention. It was a big hotel and I'm pretty sure every room was filled. What else was I going to do? Motel 6 in Slidell? (I did that one year for Jazz Fest - probably shouldn't have been driving, but a taxi to/from there would have easily cost as much as staying in the French Quarter for what was a decent, but nothing special hotel room.
 
2012-11-27 11:12:56 AM

Tigger: thornhill: Tigger: thornhill: Hotels simply have a monopoly in major tourist cities. You have no other options of where to stay.

That is awesomely wrong. Awesomely.

'Hotels' are a category containing multiple separate fungible competing entities, information about pricing and quality being freely available,. They are close to the perfect opposite of a monopoly.

If you don't think there is any kind of collusion when it comes to pricing I have a bridge to sell you.

Even if I grant you there is pricing collusion they are STILL not a monopoly.

In fact if you have two or more companies colluding on price guess what that cannot possibly be?

A monopoly.

(On a separate note the likelihood of pricing collusion is miniscule - not least as evidenced by the different prices - however collusion itself necessarily precludes the possibility of a monopoly so we need not address how silly that idea is).


It's a monopoly in the sense that one industry controls, dominated by a handfull of corporations, controls the whole supply. And in fact, in each city their is typically a trade association of all the hotels which lobby for laws that prevent people from renting their apartments to tourist because such rentals would provide competition. This was the case in NYC -- they pushed for a ban on short term apartment rentals. So I guess technically, the trade association is closer to a cartel.
 
2012-11-27 11:13:39 AM
This is what always makes me laugh when I read a novel and there is some down on your luck person living in a hotel room. Maybe if the character found themselves an apartment, they'd actually have some money to buy something besides ramen noodles to eat.
 
2012-11-27 11:14:23 AM

ReverendJasen: What I want to know is, why the fark is it that the more expensive the room is, the less free incidentals or services you get? Yet cheap hotels fall all over themselves to give it to you? Makes no damn sense; If I'm paying $300 a night for a bed, I'm not paying $20 a day for farking wifi access.


The cheaper hotels have to compete for people looking for the best deal. High end hotel customers care more about convenient location and rating.
 
2012-11-27 11:14:48 AM

mongbiohazard: thornhill: Tigger: thornhill: Hotels simply have a monopoly in major tourist cities. You have no other options of where to stay.

That is awesomely wrong. Awesomely.

'Hotels' are a category containing multiple separate fungible competing entities, information about pricing and quality being freely available,. They are close to the perfect opposite of a monopoly.

If you don't think there is any kind of collusion when it comes to pricing I have a bridge to sell you.

There isn't the collusion you're imagining. I worked for Marriott for many years and not only are hotels competitive against each other, but the brands within the company even compete against each other! It sucked to find out the Residence Inn down the street was undercutting us for the same clients, but it absolutely happened.


Was that you at the Courtyard? Sorry.
 
2012-11-27 11:16:37 AM

mechgreg: thornhill: mechgreg: I think if it had daily maid/laundry service apartment costs would be comparable. There is also the wear and tear factor, people won't treat a hotel room the same way they treat there own home. It is the same reason renting a car for the weekend would be higher than a monthly car payment.

Maids are paid minimum wage; that's probably the least of their labor expenses.

As for laundry, even high end hotels (e.g. the W) now request that you do not ask for new towels during your stay so to conserve energy.

As for wear and tear, I think most hotels defer as much maintenance as long as possible so they can renovate all of the rooms at once, making the maintenance more cost effective.

The labour expenses for maids are low but they are there. I mean if when I lived in my apartment I hired a maid to come every day for an hour, and only paid minimum wage it would probably cost me a few hundred bucks a month (assuming I could find anyone to work for an hour a day for minimum wage).


There's economy of scale. If you were to hire a private maid to clean your apartment, whether one day a week or everyday, their price would include their travel time from going to one apartment to the next. That is, a maid in a hotel can clean more rooms in an hour than a made having to travel between apartment buildings.
 
2012-11-27 11:16:45 AM
csb
I remember one time I stayed in a shiatty $50 motel because it was the only joint around. Classy place with the tube tv locked down and sheets likely washed during the 80's. Normally I'd just sleep in my truck in a situation like that, but I was traveling with a girl I was goin out with at the time and she wanted none of that. Was woken up at around 3am by a woman in the next room screaming fu*k that ass nigg*r, f*ck that ass nigg*r. and something about balls deep. It may have been payback for earlier yelling from my room. Because what else are you going to do in a shiatty room other than drugs and farking.
 
2012-11-27 11:17:10 AM
On another note, I miss the days before the kids were school age. We used to get great deals by vacationing in september or may. Crowds were down too.
 
2012-11-27 11:19:01 AM
Because a well-placed hotel is a gold mine.

Also, you are paying for the empty rooms as well as the room you occupy. A 60% occupancy rate is sufficient to make a hotel or motel profitable, but that means you are paying for the 40% of rooms that are empty (on average). And they still need some heat, cleaning, etc. Since travel is highly seasonal, the occupancy rate is lower for much of the year and you pay for that also.

As John Milton put it, she also serves who only stands and waits.

Much like airline seats, you may be paying for bargains offered to other people as well. The same room can be rented at many different rates depending on how early you book, whether you stay over a weekend, yada, yada, yada. Bargains are available to those who shop around and who plan the right time ahead, but if you are over a barrel, they can really take advantage of your ignorance of the market or your urgent need.

The entry cost of setting up a large hotel or chain is big enough to keep out competition. Like a gas station, a hotel has to be where you need it when you need it. In fact, the more I think about it as I type, the hotel trade combines the worst consumer-gouging traits of many other businesses, such as airlines, housing, restaurants, gasoline retailing, short term loans, etc.

And as I said, a good hotel is a gold mine. You are almost always paying too much.

Not doubt hoteliers would tell you of the horrors of their high costs (especially if they are being rolled by the mafia on laundry, supplies, "fire insurance", etc.) The costs of running a hotel are in fact quite different from the costs of running a household. You pay for food, cleaning, laundry and all sorts of things that you would do for yourself at home.

And because the tourist and business trade are cyclical, the hotel has to be able to survive long dry spells with few customers. They can cut their staff easily enough, but they have high overhead compared to a retail business. The rooms have to be there whether they are rented or not, and so does most of the furniture, plant and amenities other than food and beverages which can be ordered on short notice.

In any case, a house is not a gold mine. It is a money pit. If a hotel hasn't got any customers it is not a hotel. It's a very big, empty house for a couple of permanent staff.
 
2012-11-27 11:22:50 AM

thornhill: Tigger: thornhill: Tigger: thornhill: Hotels simply have a monopoly in major tourist cities. You have no other options of where to stay.

That is awesomely wrong. Awesomely.

'Hotels' are a category containing multiple separate fungible competing entities, information about pricing and quality being freely available,. They are close to the perfect opposite of a monopoly.

If you don't think there is any kind of collusion when it comes to pricing I have a bridge to sell you.

Even if I grant you there is pricing collusion they are STILL not a monopoly.

In fact if you have two or more companies colluding on price guess what that cannot possibly be?

A monopoly.

(On a separate note the likelihood of pricing collusion is miniscule - not least as evidenced by the different prices - however collusion itself necessarily precludes the possibility of a monopoly so we need not address how silly that idea is).

It's a monopoly in the sense that one industry controls, dominated by a handfull of corporations, controls the whole supply. .


So not in anyway a monopoly then?

Got it.
 
2012-11-27 11:26:04 AM

thornhill: Tigger: thornhill: Tigger: thornhill: Hotels simply have a monopoly in major tourist cities. You have no other options of where to stay.

That is awesomely wrong. Awesomely.

'Hotels' are a category containing multiple separate fungible competing entities, information about pricing and quality being freely available,. They are close to the perfect opposite of a monopoly.

If you don't think there is any kind of collusion when it comes to pricing I have a bridge to sell you.

Even if I grant you there is pricing collusion they are STILL not a monopoly.

In fact if you have two or more companies colluding on price guess what that cannot possibly be?

A monopoly.

(On a separate note the likelihood of pricing collusion is miniscule - not least as evidenced by the different prices - however collusion itself necessarily precludes the possibility of a monopoly so we need not address how silly that idea is).

It's a monopoly in the sense that one industry controls, dominated by a handfull of corporations, controls the whole supply. And in fact, in each city their is typically a trade association of all the hotels which lobby for laws that prevent people from renting their apartments to tourist because such rentals would provide competition. This was the case in NYC -- they pushed for a ban on short term apartment rentals. So I guess technically, the trade association is closer to a cartel.


You obviously are working off of a lot of incomplete information. For instance, you seem to not even know about the burgeoning boutique hotel trend, and only tangentially touched on corporate housing (short term furnished apartment rentals). And if you're going to bring up furnished apartments you should be aware that they're taxed very differently (much lower) then actual hotels - on the condition that they generally service clients for 30 days or more. When they start encroaching on the shorter term stuff (individual days) then they're at an unfair advantage if the taxes aren't adjusted (which is typically what the hotels will freak about when they find a Corp housing company taking their short term business in violation of tax laws).

Industry trade groups are not the same as collusion. The hotel business is very, very competitive. As I mentioned before, as a member of the Marriott company I not only had to compete with the local boutique hotels, Hilton down the street and other short term providers... but I ALSO had to compete against other brands in my own damn company! If you see collusion there you're imagining it.
 
2012-11-27 11:29:31 AM

awfulawful: Really? 1000 people asked that?


Seriously
 
2012-11-27 11:35:13 AM
Besides the aforementioned maid services, hotels renovate frequently. Carpets are typically replaced every 2-3 years (or as needed), with a full renovation about every 8.

And finally, the hotel isn't 100% occupied 100% of the time. Neither are most apartments, but most hotels during the week or slow seasons are often fairly unoccupied but yet incur much of the same overhead.

That said, I'm a fan of AirBNB. Great way to stay in a city like SF or NYC.
 
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