Originally Posted by
sethMCOflyer
Your theory falls apart once you look at international hotels and see that even comparing to the CNY or JPY hotels have gone way up in price.
It’s really just supply and demand, this isn’t rocket appliances. Hotels have a demand curve and have realized that it starts to bottom out at a pretty high price. Traditionally a hotel may believe that 80% occupancy maximizes profit, and in my example they find that $150 is the price that gets them to 80% occupancy. You’d normally think that if they started charging $450 for that same room they’d be down to 10-15% occupancy but they’ve found they’re still at 60%. So they’re selling 25% fewer rooms, but they’re charging 3x the price and lowering their variable costs like maid services. The traditional way of pricing rooms based on a single variable has gone out the window.
There is no theory about FX. GUWonder conflates FX with inflation and started talking about exchange rates. I was just pointing out that it is empirically incorrect to say that the USD has not fallen relative to other currencies over the past 2 years because he often makes incorrect claims without sourcing them on this forum.
Inflation is not the primary driver of higher hotel prices but, without a doubt, it has contributed. You say quantifiable inflation is single digits. I fundamentally disagree but there's not much either of us can say about the CPI that has not been said already.