Behind The Rise In Hotel Rates — And How It's Benefitting Airbnb
KELLY MCEVERS, HOST:
The cost of a hotel room is going up a lot. In big cities like Boston, Seattle and San Francisco, a regular room is nearly 40 percent more expensive than it was in 2011. From member station WSHU, Charles Lane explains why the economic downturn made room prices go up.
CHARLES LANE, BYLINE: This is another headache you can blame on the recession.
ALAN WEISSMAN: It was as if someone turned a valve off on the money.
LANE: Alan Weissman is a hotel developer, and he says you need money to build hotels. And back during the recession...
WEISSMAN: Literally, overnight, the credit market dried up. This is where you'll come in. This will be the front door here.
LANE: Weissman is showing off his latest, a five-story Hilton in Westchester just north of New York City. Framers have the walls studded out, and Weissman hopes to get windows in before winter so they can have rooms ready by summer. And travelers will be glad to have them.
WEISSMAN: I think there was an absolute stop in new construction, so there's kind of a back log.
LANE: The recession-induced lag in construction lasted until 2012. Once money started flowing again, developers raced to catch up. But it takes time to build a hotel. Today, some 132,000 hotel rooms are being built. Until they're done, there simply aren't enough beds to go around. And right now, demand is huge from business travelers. Coleen Clark is managing editor of Jet Setter, an online magazine and hotel booking site.
COLEEN CLARK: The economy's good. People are traveling more. Gas prices have gone down, so it's even cheaper to get around now. So people are on the road more.
LANE: It's a double whammy - short supply and high demand with business travelers. But then there's this third whammy - vacationers. Clark says social media is rewiring what people value in life.
CLARK: These amazing vacation shots of - people are taking all the time might be the one vacation they take every year. But when you look at a feed, you're seeing these pictures every day. And so I think a lot of times, vacation's just top of mind now.
LANE: The bottom line is sticker shock. In some cities, run of the mill hotel rooms are renting for $400 to $500 a night.
CLARK: And as demand has gone up, prices have gone up as well.
LANE: That can be tough on business travelers whose budgets are sometimes capped by company per diem policies.
MARC MCCABE: We say that business trips are the trips you have to take, not necessarily the ones that you want to take.
LANE: Marc McCabe runs the business travel division for Airbnb, the home-sharing website. When hotel rates first started going up, McCabe says travel managers for large companies reached out to him for ways to cut costs. Airbnb will soon add more features aimed at more comfortable business travel.
MCCABE: Airbnb has the opportunity, I think, to make business travelers feel a little bit more at home and to give a traveler who's on, you know - in the same location for two or three weeks that extra space to cook some food, to wash their own clothes.
LANE: McCabe says the hotel shortage and the recession catapulted Airbnb to where they are now. The company plans to sell stock and says they're worth $24 billion. Still, even McCabe says traditional hotels won't be replaced. He sees peer-to-peer rentals more like a safety valve for when sporting events or conventions bring to town more heads than beds. For NPR News, I'm Charles Lane. Transcript provided by NPR, Copyright NPR.