LogFAQs > #897497568

SmartMuffin posted...

Uh, this is also totally true of hotel rooms. Hotel rooms are perishable goods. Any night they go unoccupied, the hotel is earning no money. They are totally incentivized to price such that most rooms are occupied on most nights.

Right, what I'm saying is that airbnbs are NOT perishable in that way. The opportunity cost near 0 because they already paid for the whole place without expecting extra rent money. (Again, this is assuming they didn't buy the place specifically for renting it out.)

I guess an example would be a hotel that is at 80% capacity of whatever it was designed to be "break even" at. Any room after that is just gravy, so they can price competitively. BUT, they can't price the room down too much, because that ruins their own market for rooms the next day and the next day and so on. They are pretty closely tethered to their average price and will often leave rooms empty in that case. Of course this is just about their advertised price - hotels will often give massive discounts in secret because THEN it's just gravy without the marketing damage.

Airbnbs are left empty not because they can't find customers, but because they don't care that much about the gravy to constantly optimize their price each day. It's not like they're afraid that selling their place for $30 one night will lose them the $150 sale the next day, because that's not how those rooms are advertised. This applies even to airbnb-as-a-business places.
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_foolmo_
2 + 2 = 4