Arbitrage Opportunity: Five-Star Hotel Rooms Cheaper Than Budget Motels


There must be a way to profit from this, since it can’t last for long.

Guardian: Luxury hotels in London are slashing their rates to such an extent that it can now be cheaper to stay in a five-star hotel than a Travelodge. Analysts believe the bizarre situation has arisen because demand is falling fastest at the top end of the market, while budget chains prosper.

On Thursday last week, we checked prices at hotels across the capital for a one-night stay the following night. A double room at the Travelodge Covent Garden cost £102.50, including breakfast for two. However, a five-minute walk away, a double at the five-star Grange Holborn, including breakfast, as well as access to the large swimming pool, sauna, steam room and gym, cost just £86.25.

Actually, there might be people in position to profit from this. As an old colleague of ours once wrote, there are people whose job it is to buy up blocks of hotel rooms, which they believe are undervalued, and are likely to rise in price as the date gets near. So the game would be to buy up a block of 5-star rooms, and somehow sell them to the people who are about took book in the Travelodge.

Oh, and then once you establish the trading mechanism, borrow at 50-1 so you can really turn a killer profit.