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Comment by stephencanon | Hacker News Reader

I recently stayed for a few days in an AirBnB room while my wife and I were in New York. A comparably nice hotel room in the same neighborhood would have run us a minimum of $350 a night; the AirBnB room was $110. While I certainly believe that some of the "benefit" of AirBnB comes from not paying for externalities, it stretches logic to believe that those externalities account for $240 a day for two people in one room.

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Isn't that less the externalities than the pool of folks using the existing hotel infrastructure (bending supply/demand) rather than exploring AirBnb/couch surfing/etc. I imagine if business travelers and tourists used AirBnB en masse, the prices would more closely approach that of traditional hotels... But with hosts that're less dependable.

There's a clearing price for hotel rooms in NYC based on the built number of hotel rooms. If everyone viewed airbnb and hotels as fundamentally interchangeable then the range of prices for airbnb units would be similar to the range of prices for hotel rooms at that time - but this would be lower than the current range of prices for hotel rooms, as the supply of available rooms will have increased.

Having said that, I think the airbnb market in NYC is reasonably close to clearing with the hotel market. Probably some listings for very nice apartments and also some for relatively mediocre apartments are underpriced, but the truth is that a night in a decent airbnb apartment is in general commensurate with the cost of a hotel room in the same neighborhood.

The catch, of course, is that there are many airbnb listings in places without hotel rooms at all - Harlem, the far Upper East Side, etc - and in those areas the airbnb prices appear low but of course we don't know the appropriate hotel room clearing price.

But to your basic point, I agree there's probably some discount right now for the general sense that airbnb is "weird" or "idiosyncratic" to the average traveller.

I’m sure there’s a large component of what you say to it, but that suggests that grandparent’s comment:

> the cost of adjusting for the externalities will erase the savings of AirBnB

is false, which is more or less exactly what I’m trying to get at too: it is not unreasonable to expect that AirBnB will continue to be cheaper than hotels even if externalities are priced in.

As for hosts being less dependable, I’m sure that happens, but the few times I’ve used AirBnB, I’ve been quite pleased. By contrast, it seems like more than half the time I check into a hotel, something is amiss or the room isn’t ready by the time it was promised, or ... something. There are exceptional hotels with great customer service, but most hotels are borderline terrible in my experience.

That assumes that the hotel room and the AirBnB room were comparable in terms of amenities and services, which they probably weren't. (Room service? Daily cleaning? Gym? Doormen/porters?) You can get a pretty nice hotel in NY for $350 a night -- the W hotel downtown has rooms for $359 this weekend.

I'm not saying there aren't great deals out there on AirBnB; right now it's a market of people basically selling unused inventory at very low prices. I'm saying that if they had to incur more normal requirements (safety, taxes, insurance), the pricing would rise and the inventory would decline. If that same AirBnB room cost $250, it might not as interesting to you.

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