An important way hotels make money is in so-called compression pricing: the ability to send rates way up in times of peak demand. Such nights make up just 10–15 percent of nights but are a critical source of revenue. One of the things about Airbnb that makes hotel executives cringe is that when a big event comes to town, its supply of inventory can expand instantly to meet the demand. Previously, travelers would have paid higher rates or gone as far out as they needed into the suburbs to find a reasonably priced room. Now, they can just turn to Airbnb.
