Broback's Blog

I posted back in September about how (despite the Wall Street meltdown) hotel rooms in New York appeared to be insanely overpriced.

If hotel rates tracked to the Dow, the room I booked back in 2003 at $225.00 per night should have cost $248.00 in Sept. The real rate? A gouge-a-rific $579.00.

At the current level of the Dow, the room cost would be $193.00 today. This aligns well to in-depth “fair market” value analysis. I determined the correct price of the room at $199.00 per night. This was achieved by staying in the room and thinking hard about what it really ought to cost. (I figured if Wall Street can do this with CDO’s I can do it with hotel rooms…)

So, what does Expedia say the cost of the room is today? What do they want to charge for my $199.00 room?

$399.00.

The bad news is that this cost illustrates a 100% insanity premium over the fair value of $199.00. The good news is that it’s way better than the September insanity premium of 190%. That’s a 47 percent drop in insanity in less than a month!

Eager to see what happens next month.