Why are hotel rooms so expensive?

Discussion in 'General Discussion | Travel' started by sobore, Dec 3, 2012.  |  Print Topic

  1. sobore
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    sobore Gold Member

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    http://www.dailyherald.com/article/20121201/business/712019987/

    There’s not a single reason why hotel rooms are so much more expensive on a per night basis than ordinary housing. But one place to start is taxes. Local tax codes tend to treat homeowners relatively favorably. There are some ideological and substantive reasons for this, and also crass politics.

    Homeowners, as a class, are more likely to be stable long-term members of their community who vote in city council elections. A hotel guest is just the reverse — a transient who can’t vote. So in addition to the underlying commercial real estate taxes that are probably higher than what’s levied on residences, hotel guests need to pay sales taxes and special excise taxes.

    In New York City, for example, a hotel room is subject to 8.875 percent worth of state and local sales taxes, plus a Hotel Occupancy Tax that runs to 5.875 percent plus an extra $3.50 in most cases.

    The Global Business Travel Association rates New York’s as the most burdensome hotel tax situation in the country, but one interesting finding of theirs is that there’s actually relatively little variation. My assignment seems to have come from a reader in St. Louis. In that city, you’ll pay 8.491 percent state and city sales taxes and 7.25 percent in earmarked hotel taxes. And commercial real estate in general pays a 32 percent tax rate, far higher than the 19 percent levied on residential property.

    Read More: http://www.dailyherald.com/article/20121201/business/712019987/
     
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  2. Mike Reed

    Mike Reed Gold Member

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    Other than:

    Variable occupancy rates
    Market demand
    Single-night commitment
    Added services (housekeeping, maintenance, etc.)
    Branding, marketing and operational costs
    ...

    I'm not sure what the point of this article is given how wildly mistaken the author is about the basic premise.
     
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  3. Captain Oveur
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    Captain Oveur Gold Member

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    A few years ago, had a friend who worked at a hotel which brand is internationally known.

    Told me some of the ins-and-outs of the business overall and some specifics of the hotel.

    Found out that the actual cost, mostly labor, was $26.28 per night. I always keep that in mind when I think about getting a super LNF rate at Marriott (which isn't the brand of hotel my friend worked at).
     
  4. BWIflyer
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    BWIflyer Silver Member

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    "Found out that the actual cost, mostly labor, was $26.28 per night"
    Whether the room is occupied or not. Is that right.
     
  5. Mike Reed

    Mike Reed Gold Member

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    Not being argumentative but I find that hard to believe, all in. Consider payroll, bennies, taxes, property taxes, utils, etc. look at major brands sec filings and see single digit profit margins at the corporate level.

    Sent from my iPhone using milepoint
     
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