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moneyTypically, we aim to showcase travel deals that save you money — like this half-price cruise to the Western Mediterranean. But a few deals for hostel dorm beds during the 2012 London Olympics (July 27 to August 12) were so frightening that we had to share.

Sites like Expedia and Hotels.com have policies dictating that you can’t book rooms more than 11 months out, which means they’re only now allowing reservations coinciding with the Olympics.

Here’s what we found: A 28-bed all-male dorm room at Palmers Lodge Hostel (just south of Hampstead Heath) is on sale for $157.50 per person, per night on Hotels.com — that’s about $4,400 per night for the whole room. (The rate includes 28 breakfasts.) That said, whichever bed you book in the hotel, be it in an ensuite double or an eight-person female-only room, the per-person price remains the same. (Hint: Palmers’ direct booking prices are significantly cheaper than those posted by Hotels.com.)

Want to stay at Hostel 639, a spot near Notting Hill, during similar dates? On Hotels.com, the per-person price for a night at Hostel 639 is equal to rates for a dorm at Palmers — but Hostel’s rates are two times what Palmers offers for a basic double with shared bathroom. That’s more than $500 per night for two travelers. Reserve a quad room today and you’ll pay $1,000 per night. Booking sites, including Hotels.com and Venere.com, have rates starting at less than $20 (includes taxes) for stays at the same properties this September.

These price hikes should come as no surprise, since news outlets have been reporting on soaring rates during the Olympics in London for some time. But perhaps we can be optimistic that the hoteliers are being, well, optimistic. Tom Jenkins, chief executive of the European Tour Operators Association (ETOA), told the Telegraph, “In Athens [host city of the 2004 Olympics], around 15,000 hotel rooms were sold. London has 125,000 rooms to sell. Such optimistic pricing in the face of such disparity is extremely brave.”

David Tarsh, another spokesman for the ETOA, has been widely quoted as saying visitors to London during the Olympics should wait until early next year before booking accommodations; Tarsh has predicted that hotels with unsold rooms will be forced to reduce their prices by that time.

Have you ever stumbled upon a hotel deal that was too bad to be true? Share it in the comments.

— written by Dan Askin

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2 Responses to “New London Olympic Event: Hotel Price Gouging?”

  1. Pat Gilbert says:

    I wanted to stay in Kongsvinger, Norway when visiting the hometown of my great-grandfather. The only hotel in town, a \historic\ (really old) property was rated fair to terrible on travel sites yet was priced at $287 per night. I decided to take the train back to Oslo and stay in a very nice hotel with excellent service for about half the cost.

  2. Peter B says:

    I have been to 16 Olympic Games, and the lodging scenario is the same for each Games. Every Olympic host city hotel and home/flat rental initially charges outlandish rates for the Games period up until 2 – 3 months before the Games. The thinking is that “the World is coming to my city and this will be our chance to make a huge profit”. The local Olympic Organizing Committee requires many major hotels to set aside almost all of their rooms to make sure all team and IOC officials have a secured lodging (which artificially makes the hotel market look unavailable to visitors). Then 3 – 4 months before the Games, the unreserved rooms are released, and as the weeks go by, their rates slowly slide back to about normal. By the time home/flat owners realize that the rental market is not what they expected, they scramble in the last weeks but by this time prices have scared away many potential visitors, and the homes/flats have an astonishingly high vacancy rate during the Games. In the most recent Games (Vancouver) 90% of the available rental units any farther than one km from the Olympic Center were empty. Then in the weeks following the Games, there are scandalous articles in the press about owners being misled by real estate agents and the press (neither of whom have had any prior experience with the Olympic Games, of course). Then, two years later, the whole cycle starts over again in another Olympic city. No one ever learns from history. Vacancy rates in Sydney 2000? Over 90%. In Atlanta in 1996, just above 80%. And on and on. Owners and agents need to ask themselves, “Would I be willing to pay triple market rates, on top of the expense of travel and tickets, to see the Games?” And for most people, the answer is, “That’s crazy . . . I can see it for nothing on TV”. And in today’s weak economy, it is certainly not going to be better than historical trends in London. Too bad.

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