San Francisco Hotels Are World’s Priciest as Rates Surge | Hacker News Reader

San Francisco Hotels Are World’s Priciest as Rates Surge

bloomberg.com

41 pointszt52 comments

I wonder how the analysis was done. San Francisco has a very different "hotel" presence than other cities I've been in. Here are just a few unique things:

* SF is one of the few cities I've ever been in where you will see motels in populous city areas. Normally you'd think in such a crowded city having a huge parking lot on your property would be foolish, but it seems to be popular. Off the top of my head I can think of 2 motels in the Marina/Cow Hollow area and 2 more in Soma, both of which are neighborhoods with insanely high real estate prices.

* In the areas in/around the Tenderloin there are a huge number of "hotels" that are basically extended stay residences for people who can't afford any apartment in SF. They're a few hundred bucks a month and feature tiny, often dirty rooms with shared bathrooms and no kitchen. However they're all called "____ Hotel" so they'd appear in any blind analysis of the city.

Regarding motels, I imagine that's the a consequence of the same anti-development forces that have been driving up real estate prices and produce extremely valuable areas filled with low-rise buildings.

Having a huge parking lot on your property in the middle of SF has to be foolish. At the very least it must be worth building a multi-level garage to save space. However, is it feasible to replace it with anything else? If you already have a parking lot, perhaps because it was totally sensible in 1932 or whenever it was originally built, what does it take to build something more valuable on that land today?

I'm really curious where these numbers come from. I've found NYC always way more expensive than SF. Similarly London is hugely expensive. I'm wondering it there's either a bias in the way I search and look (booking.com) or whether there's some other explanation like a few super expensive places raising the price.

As an example I just put in Oct 11, 2015.

SF:

     21 hotels $55-$110
     36 hotels $110-$160
     55 hotels $160-$220
    123 hotels $220+

NYC:

      4 hotels $55-$110
      7 hotels $110-$160
     35 hotels $160-$220
    367 hotels $220+

SF jumped 88% in one year according to these stats. That seems odd to me. Maybe since they only look at two weeks, and fairly far out, something messed up the stats.

Any week there's a large convention at Moscone, hotel prices double across the city. I helped some friends who are coming over in October to book hotels, and we ended up moving the trip around to avoid the Oracle thing, because paying $500 for a hotel that's normally $350 is just not fun.

Yeah. During a big Moscone event in late August, there are "cheap" hotels at the airport that were over $400 as of a month ago and very ordinary business hotels near the Moscone and Union Square were in the $500-$600 range when they had rooms available at all.

My personal sense is that San Francisco has gotten more expensive than New York or London. It obviously depends on what's happening at the time and where you're staying but I find with a little searching I can usually dig up reasonable-ish rates in New York and London. In San Francisco, if there's a big Moscone event (which tends to be when I travel there), it's hard to find much even on the other side of town.

London and NYC are significant larger, and have many more tourists per capita. They can probably absorb large events without it making much difference to the average price --s prices increase tourists book the week after, or a slightly different area.

Both also have good public transport, which makes hotels further from the event more appealing. (I don't know SF enough to content on transport there).

I don't know about tourists per capita but they're certainly significantly larger cities so most individual events don't cause the huge spike in hotel prices that something like an Oracle or a Salesforce show causes in San Francisco. That said, San Francisco is pretty expensive these days even if there isn't a huge show on just because of overall demand.

In general, public transportation in San Francisco isn't very good although it's really not very good to get to the Javits in New York either. However, the Fisherman's Wharf area and Nob Hill aside aside I'm not sure there's a huge amount of hotel capacity in San Francisco outside of a 10-15 minute walk to the convention center anyway.

Expedia had this for SF (weekdays in August):

22 hotels $75-$125

79 hotels $125-$199

88 hotels $200-$299

79 hotels $300+

5 star average of $382, 4 star average of $348 etc

The article really should be using median pricing anyway, but I don't see where they could get such a high average - the total average from Expedia is $246.

What happens if you run the same search for the week of Oct 26th?

Try Oct 27 instead. Most hotels are sold out on that date, but the one across the street from me that is normally charging $250 is now charging $819 a night...

the magic word is "confounding variable"

The stat chart cited in the article says "average hotel cost", so perhaps SF has far fewer hotels in the lower-end category compared to the other cities listed?

That's pretty reasonable, lower cost hotels in NYC would probably be in outer boroughs, which to SF would be completely different cities like Oakland, San Mateo, San Jose, Santa Clara, etc..

It's fairly common for both business and vacation travelers to stay in Oakland and commute.

Bloomberg tracked hotel prices for dates in February 2016. The Super Bowl is being held in SF in February 2016:

http://travelskills.com/2015/07/01/san-francisco-hotels-not-...

Using the Average Daily Rate instead, SF hotels come out as third most expensive in the US (behind NYC and Honolulu).

To be precise, its being held 40 miles south of SF.

In fact, they tracked prices for Feb 1-10, and the Super Bowl is Feb 7. The week before the Super Bowl is the dog-and-pony show. Whether or not people are actually going to fill up SF hotels for an event 40 miles south (vs staying in San Jose or elsewhere), the hotels are likely setting their rates high now. They can also expect to lower them later (during football season, say, as it becomes clearer which teams are likely to attend) if they can't sell them earlier. Basically, they have no idea how much to charge or how much demand they'll see, since they have no experience with this event, so the pricing is going to be set too high to preserve their option to lower them later.

So the survey and results are pretty much meaningless.

In London I can always find ok hotels for $150/night. In SF it's 300-350 minimum. All prices including taxes. (Why don't you just include them in the display price, americans?)

Why don't you just include them in the display price, americans?

In most cases it's because local lodging taxes are insanely high. I regularly see e.g. $65 rooms bumped up to close to $100. (I haven't stayed in SF, but it would surprise me if it's an exception.)

Are European taxes set at a national level? In USA the relevant taxes are set by each city and county, so by hiding the tax, highly-taxed hotels can better compete with those in the next town over.

EDIT: don't expect anything to be good for the consumer!

There typically aren't any lodging taxes. The VAT varies, but hovers around 19-25% (per country).

Your answer doesn't make sense though. Laws around price display need to be consumer-centric, not provider-centric. Why should a place in a high-tax location be able to compete with a place in a low-tax location by fooling the customer?

At least four reasons. Americans are used to the system they have, it doesn't cause any meaningful economic problems domestically (complaints come almost exclusively from foreigners). Businesses specifically want to show you the price they're charging you, as apart from the taxes they're forced to collect; that also enables businesses to charge a bit more in the rounding schemes (eg sell a blu-ray for $5 headline price, charge tax after; if they had to build tax into it, they'd lose ~6% on the pricing to use the rounding promotion approach). The US has 50 states with different tax schemes, that's a nightmare for labeling goods.

For example, usually a bag of chips at Target or Walmart or a convenience store will say eg $3.99 printed on the bag. Some stores will slap their own dominant label on there, others choose not to.

Vendors often stock the shelves at stores, especially for certain categories of products, and store types. The chip delivery guy will stock the convenience store, Walmart, etc.

Chip production (eg Doritos) and delivery is limited to just a few factories, but they distribute to every state. For convenience, for decades, the companies have typically pre-stamped prices on chip bags.

So why not do it with hotels? Because no other segment of the economy tends to do it, and for the other reason mentioned: it cuts into price rounding advertising methods (or you have to raise prices to the next rounding).

If you want taxes built into the pricing on consumer goods, either they have to stop price labeling before delivery, or customize for every state. At this point, nobody really wants to change, because the system works fine as is. Ie it's good enough, but not perfect.

tldr: "bla bla, we are lazy, not bothered"

Contrast: In Europe typically no items in a grocery store have their price printed onto the actual product. Or even have price tags. You look up the product price by the price sign placed adjacently. It includes (by law) a handy price comparison (in the format of currency per e.g. liter/kg/g/etc.)

I think your system sucks donkey ass. :)

Also in the U.S. almost all major groceries likewise use signs on the shelf to display price, and the cashier reads the bar code to retrieve it at checkout.

The actual reason is a lack of sufficient pressure to change this practice.

Businesses specifically want to show you the price they're charging you, as apart from the taxes they're forced to collect...

This is a bit of a cheat, first because high lodging taxes are often created at the request of local hotel owners: it typically feeds a tourism-advertising slush fund. Also, we're now overrun by TIF, a scheme by which government loan guarantees for development are theoretically repaid by higher "taxes" on business in the developed area. In that case hotel guests are directly paying the bills for hotel investors.

I'm confused. I just posted above a search that showed lots of hotels below $220 in SF. So it's seems arguably false that SF is 300-350 min. Maybe you're limited it to high end? Or maybe searching from the UK shows different prices? Also, I've never been charged more than was shown on booking.com

And people wonder why Airbnb is taking off like it is. The hotel industry is a cartel.

I hope Airbnb stays A Good Thing™ for a long time. I fear with its high valuation that it will only last so long, before sweeping changes are made that make it no longer worth it.

For now, I'm going to ride the train to the end of the line.

DISCLAIMER: I am an Airbnb host, but not in Cali.

Then why are Airbnb rentals in SF more expensive that in other cities? Hint: they all charge what the market will bare.

I stay at these places when I'm in town.

http://www.sfhostels.org/

I prefer https://www.airbnb.com/ myself, it's sort of in between :P

What is this airbnb.com thing?

Thanks, I mean, why would anyone build hotels and employ union workers when they can just convert housing to hotels?

</rant>

Exactly. Why pay for more capital and labor expenses to convert existing productive real estate into a generic, anodyne hotel experience with amenities like daily housekeeping service that I don't need? One that's probably located in the tourist-trap district? Instead, I can utilize existing capital more efficiently and enjoy myself in a real part of San Francisco designed for actual human beings, and spend the savings on something more relevant to my interests (like more frequent travel). Almost certainly this means more profits going to local businesses -- and to the homeowner as well, who is more likely to spend them locally than HotelCorp.

Granted, there are some contract issues if the host rents the apartment instead of owning it, and there is a risk of some externalities (chronic noisy guests upsetting neighbors) which could be managed with light regulation... but surely the idea is a sound one which should be embraced and encouraged. Right?

And those would-be unionized hotel employees would be there to do useful work for fair pay, no? They're not charity cases and I should't feel bad or feel compelled to use their services if I don't need those services at all, right?

</counter-rant>

Why not both? https://www.stay22.com/

HI++, adelaidehostel.com is nice too. :D

Wow, $46 for a bed in a hostel.

Is this before or after the fourteen percent hotel tax? that would be another bump of nearly sixty bucks on the average room price given.

Both cities have hotel taxes which should be included in the price of the room, AFAIK.

I wonder what the median prices are.

This smells like it might be the case that most hotels cost significantly less than the average but a few super ridiculously expensive ones jack up the average by a very large margin.

How is it that Airbnb is hurting hotels again? SF is the hometown of Airbnb, and yet hotel prices are still sky high.

In all the moaning I've heard about Airbnb I have not actually heard anyone make the claim that they are hurting hotels. I'm sure actual hotel company executives have but most of the complaining I've heard has to do with lots of strangers coming through people's buildings and things like that.

It's not expensive, it's 'progressive'

"Surge" pricing. FTFY. =)

Why build hotels for the rich when SF can have miles of abandoned warehouses for the destitute?

San Francisco is a union city. They do a lot of building. Too much in my opinion; San Francisco is a small city. I don't think there's a shortage of hotels in San Fancisco? Even in Bubbles(like SF is currently experiencing), I have seen high end hotels leave rooms sit empty. I worked at the Fairmont during one of these booms, and they didn't budge on prices--they just left rooms empty. The twins just didn't need the money? Now shelters for the homeless are another story. SF is one of those city's you can really end up homeless--really fast. Maybe faster than NY? Rents have skyrocketed in SF, and the Bay Area these last few years. I have never seen anything quite like this?

90% of the city is zoned for 4 story buildings. Almost every development proposal gets shortened for whatever reason. Areas that lend well to being urban, dense hubs for high rise offices/hotels/residential buildings like Central SOMA are zoned for 4 story buildings. It makes no sense.

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