I was considering taking a trip down to Austin, TX to visit family in two weeks, but apparently there’s this Formula 1 race going on.
Not to debate the appeal (or lack thereof, on my part) of a Formula 1 race, but I was just trying to book a hotel room in the area, and if I were to go the weekend before or the weekend after, I’d get in and out for $100/night. Perfect.
But for “Formula 1 Weekend”, I’m expected to shell out $300/night.
Is this an example of “price gouging”? Or is it simply Economics-101 “supply and demand”? (yes, I am pretty sure the answers are “no”, and “yes”, but why?)
This was probably one of those “heard it from a friend of a friend who saw it on the internet” stories, but I seem to remember hearing that people in New Orleans were selling bottled-water for $10 a pop immediately after Hurricane Katrina, and it would be hard to argue that that wasn’t a textbook-example of “price gouging”.
Is it as simple as the “natural disaster element” that separates they “hey man, it’s America, whatever the market will bear”, from a total, deplorable piece of shit who’s trying to capitalize on other people’s unfortunate circumstances?
Sounds like supply and demand to me. Every hotel does it, they know they’ll be booked full so they raise the rate to capitalize on it. Unlike the $10 bottled water, a trip to Austin and a hotel room aren’t something you need but something you want.
I knew there was something “reasonable” but still sorta crappy about it, and I think you said it better than I did in my head - the difference between “something you want, and something you need”.
Our friends’ son plays football for Alabama. During home games, the local hotels not only double the price, but won’t allow you to book a single night. You have to book Friday AND Saturday night.
My daughter attends college in the country. The two hotels jack up their rates during family weekends as well. The front desk clerk told us that this was imposed by corporate NOT the individual hotel.
We traveled to Phoenix during one of the big NASCAR races. Luckily we’d booked our rental car ahead of time because when I checked to see if I could get something cheaper, rates for 2 nights had risen to over $700…for a van!
My advice is to call the hotel directly and see if there’s anything they can do to lower the rate.
Laws on price gouging, where the exist (and that’s not everywhere) typically address the rise in prices during or following an emergency, like a hurricane, earthquake or blizzard, where people may be in desperate need of supplies. Higher hotel prices during busy seasons don’t count.
I’m sure it varies by state, but in Florida, the hotel has to have a posted “maximum rate” which they have to charge at some time of the year.
This prevents bumping the price beyond that in case of a disaster or emergency, but allows for high event prices.
Why is an increase in prices in response to a natural disaster “price gouging”? Is it better for me to charge $10 a bottle of water or to simply not bother selling the water at all?
Because in many cases, you (the bottled water seller) have plenty of supplies. You are simply taking advantage of the psychological state of the panicked citizens seeking supplies.
Demand also becomes inelastic in this situation, and so that $10/bottle water is a distorted price.
In the hotel room situation, this is just how to balance supply and demand. If the hotel operator chooses the prices correctly, the hotel will just barely sell out completely, and everyone who is willing to pay the market price gets a hotel room.
It is not price gouging as the hotel as registered a maximum price for that room. The prices go down from that registered price based on occupancy and or special discounts that are applicable to you (AARP, AAA, etc). You may have noticed a price notice (usually placed on the evacuation plan that is on the door to the room) posted in the room. That notice will show the maximum price the hotel is allowed to charge for that room. If you paid more than that price then you have been gouged.
You’re going to visit family, then stay with family. Even if it means sleeping on the couch, pulling out sleeping bags, being a nuisance. Being a nuisance once is a while is part of being family.
If for some reason you need to stay in a hotel, reschedule for when there isn’t this huge demand for rooms.
I’ve always wondered at that maximum on the sign an wondered why I paid $100 for a $549 max room. Now I know! The maximum is always absurdly high, in my experience.
