Why Rebuilding New Orleans Will Be So Expensive

300% of “Rack Rate” a Night for Hotel Rooms at the W

I tried in vain to obtain a hotel room for an employee downtown so that the employee would not have to sleep on an air mattress every night. It turns out that FEMA has rented the 190 available rooms from the W hotel by paying 300% of “rack rate.” Rack rate is the ordinary price for a hotel room without any discounts. This is the standard rate that a hotel will quote you when you ask for a room. Let’s make some assumptions here… I am assuming that rack rate for the W in New Orleans this time of year is at least $200 a night since the convention season has already started. That would put the rooms at $600 a night per room. That comes out to $114,000 per day for 190 rooms at $600 a day each.

With costs like this I can see how rebuilding New Orleans will be insanely expensive. I would imagine that the rates should come down some in the not too distant future, but, I am not holding my breath. Assuming a rack rate of $251 and the cost would be $1 million a week for 190 rooms. Anyone know of any good deals on hotel rooms in downtown New Orleans? Any word on when additional hotels will be back in action?