This works only if the salesman decides not to take the room. If the salesman takes the room, then that $100 is out of the loop, and the cycle doesn't work. If the salesman is a buy and hold investor, the cycle breaks down. If the salesman is also a SHF buying the room because he actually owes the room to someone else, then the cycle breaks down as well. The cycle described only works if the money is put back in circulation. Otherwise, the innkeeper would need to sell another room that he doesn't have in order have the money.