Austin, Texas, can be a nightmare for locals during South by Southwest—unless they own property.
Homeowners are cashing in on the overwhelming demand for hotel rooms during the week-and-a-half-long conference by renting out their homes for a premium via rental sites like HomeAway and Airbnb.
"It's the gift that keeps on giving," said Joel Rasmussen, an Austin property owner who has been renting his properties for six years. "Our business leaps year to year. Every year, the conference breaks new records for attendance and we get a big boost in business."
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Last year, SXSW injected more than $218.2 million into the Austin economy, and the conference remains the single most profitable event for the city's hospitality industry.
But with more than 150,000 people coming to Austin for the conference and only 30,000 hotel rooms, there's a huge opportunity for people to make big money by renting out their property, said Adam Annen, a spokesman for HomeAway.
HomeAway has seen its average nightly rate for a two- to three-bedroom property in Austin, which is usually $250 per night, jump to $650 to $850 per night during SXSW. The rate hikes for rentals hasn't stopped people from booking on the site, though. Of HomeAway's 1,060 listings in the Austin area, 73 percent are already booked during the conference, which starts Friday and runs through March 16.
Airbnb also expects a big increase, saying it 11,000 guests will likely stay in Airbnb properties during SXSW.
Austin residents who live in the downtown area, where most of the events take place, have the best chance to profit.
A number of apartments in the area are charging more than $1,000 a night on Airbnb's website. A two bedroom that sleeps three is going for $1,400 a night and another two bedroom is listing for $2,238 per night.
This kind of extreme pricing is common during SXSW, Rasmussen said.
Rasmussen, who is also president and co-founder of Austin Rental Alliance, said he increases his rental prices to about double the normal cost during the conference, but said that his rate hike is tame in comparison to what some people charge.
"It gets crazier every year. We've seen two bedrooms rent for $1,500 per night. And some people are desperate so they'll pay it," he said.
Despite some price gouging, SXSW would be impossible to host in the city of Austin if it weren't for private rentals, Rasmussen said.
"Without question this could not happen without the flexible lodging that happens through Homeaway and Airbnb," Rasmussen said.
—By CNBC's Cadie Thompson. Follow her on Twitter @CadieThompson.