Inauguration Day is just three days away and Washington, D.C. is expecting crowds upwards of 800,000 people, according to some estimates. With that many out-of-town guests, hotels have historically had a field day jacking up prices, but thanks to competition from the sharing economy, travelers have more options at lower prices.
Whether President-elect Donald Trump matches President Barack Obama’s record-setting turnout of from 1 milion to 1.8 million visitors to the nation’s capital for his swearing is questionable. However, anyone with a bed, a toilet, and a shower are able to cash in and, historically, that’s been the hotel industry.
This year, the rising popularity of home sharing (online platforms that permit you to rent out a room or your apartment or house to strangers) has offered more budget-friendly, local accommodations making it that much harder for hotels that raise prices.
A quick online search of available hotels finds that hotel prices for the two nights bookending the Inauguration are double –even triple—the prices for the same exact timeframe just one week later. To stay within city limits, expect to shell out between $225 a night to well over $2,000. For $225 a night though, you’ll be on a bunk in a shared room in a hostel that goes for just $23 per night the next week. That’s at the low end of the spectrum. There’s still a room for you at the Courtyard for just $1,450 per night, although if you wait a week, you’ll have the same room for $209 a night. These aren’t even the priciest options.
And then there’s Airbnb. There are rooms going for several hundred and even over a thousand per night, but the price and assortment – given the location and proximity to the action – is a lot better.
What’s interesting is the proliferation of individuals and families renting or staying in DC-area home sharing locations this Inauguration compared to four years or eight years ago.
Airbnb released interesting data they’ve collected on Inauguration bookings through their website:
· Over 13,000 guests are booked at Airbnb listings in the Washington, DC metropolitan area for Inauguration Day — ten times as many guest arrivals as we experienced during Inauguration Day in 2013 and the biggest night ever for Airbnb arrivals in the District of Columbia.
· Between January 19 and 21, 2017, more than 15,100 guest arrivals will occur in the DC-area via Airbnb.
· Of the 5,200 listings currently booked for Inauguration Day, 25% are from first-time hosts.
· Fewer than 10% of all booked listings have increased their price from four weeks ago. The typical price increase for a booked listing is about $30 per night which is in stark contrast to local hotel rates that have doubled or are ten times their original price.
Airbnb is also touting that DC-area hosts will pull down over $5.9 million in reservations during the Inauguration – ten times higher than in 2013 – as well as a projected $10 million in economic activity for the city. For hardworking families and entrepreneurial individuals, this will be a nice budget bonus that can go towards vacations or paying down debt.
Home sharing is a welcome alternative to pricey hotels that are notorious for hiking prices in advance of major events. Price increases are a market signal that demand is increasing relative to the same level of supply. We know that hotels take advantage and inflate their prices even higher. It’s not just during the Inauguration either, but sporting events like the Super Bowl, during Commencement Season, and of course in beach areas during holidays and vacation season.
The difference is that Americans now have more options thanks to technology. Home sharing provides a viable alternative at a cheaper price. Staying in someone else’s home also provides a chance to interact with people who they wouldn’t connect with at a hotel or to stay in neighborhoods that simply aren’t zoned for hotels.
Home sharing is here to stay, so with time, we expect to see greater effects on the hotel industry for the good of consumers. As can be expected, the hotels are taking note. Let’s hope that instead of pushing back on new competition, they’ll find ways to deliver better value and price to customers. We’re not optimistic though.