The pricing does seem to be set by someone smoking crack, but maybe they get enough layovers and people that don't pay attention that they can fill the hotel at the Manhattan charges they list.
I looked for midweek stays for many weeks in September and October. Advance stay rates of about $330 when the Sheraton LaGuardia is just a bit more than half that rate, as were the similar quality and location hotels in the greater NY area.
I am arriving late at night and have an early morning flight to Europe the next day. If it weren't that I was already facing constrained sleep hours, I would just give my business to the other SPG hotels with sane pricing, but in this case I booked a different chain's property instead. Really would have preferred to book Starwood and often pay more for their properties, but not this kind of price for an airport hotel next to a sewage plant.