Something just didn’t seem right about Bloomberg’s hotel rate index we posted on TravelSkills yesterday which named San Francisco the most expensive city in the world for hotels, with a whopping 88% increase over last year. 

Sure, San Francisco is expensive, but more expensive than London, New York or Geneva? How could that be?

We should have listened to our gut on this one…

After speaking with officials at the San Francisco Travel Association late yesterday afternoon, we learned that Bloomberg’s methodology had a fatal flaw.

Here’s how Bloomberg describes its hotel index methodology:

The fatal flaw? The Bloomberg Index sampled rates February 1 to February 10, 2016. The Super Bowl is in San Francisco on February 7, 2016. That means San Francisco’s rates skewed into the stratosphere, and made the Bloomberg Index a poor reflection of reality.  

Here’s what the San Francisco Travel Association told TravelSkills later yesterday:

San Francisco enjoys being a top global destination for tourists and conventions, but it is NOT home to the “world’s priciest hotel rates” as indicated in a Bloomberg News story. The story used an unscientific “snapshot” survey that is inaccurate, including calculations from next year’s San Francisco-hosted Super Bowl week, a once-in-a lifetime event.

The hotel industry’s accepted standard for comparisons is the Average Daily Rate. The 2015 forecasted ADR for San Francisco is $255, which ranks third in the United States behind New York and Honolulu.

If the dates the reporter selected were 30 days later, it would have been an entirely different story.

We contacted the well-respected firm PKF Consulting, which tracks average daily hotel rates on an annual basis, and its data show the average daily rate forecast for downtown San Francisco in 2015 is indeed $255, which is up 10% over last year.

Referring to the two 10 day periods sampled by Bloomberg, Chris Kraus, managing director of PKF’s San Francisco office told TravelSkills, “The data used by Bloomberg may be factual, but it is not well footnoted and not a fair representation of reality.”

Kraus said that average hotel rates in San Francisco have been increasing about 10% per year over the last two years, and will likely increase 10% this year.

So you can take that 88% annual increase and $397 average rate reported by Bloomberg with a grain of salt. (SF Travel told us that the reporter is standing by her story even when presented with the fact that super-inflated Super Bowl rates were included in her calculations.)

Here’s the link to the original Bloomberg story that has now hit newspapers around the world: http://www.bloomberg.com/news/articles/2015-06-30/san-francisco-hotels-are-world-s-priciest-as-rates-surge

What you YOU think? Does San Francisco feel like the most expensive city for hotels in the world? 

–Chris McGinnis

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