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Old 08-13-2018, 08:55 AM
 
17,749 posts, read 15,023,452 times
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Quote:
Originally Posted by TaxPhd View Post
Im curious about what you mean here. Care to elaborate?
In research one often attempts to isolate an influence, which may in the real world be overwhelmed. For example if I splash in a pool the waves are very real but may be lost in an ocean.
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Old 08-13-2018, 11:30 AM
 
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Quote:
Originally Posted by galaxyhi View Post
I work in a hotel.

Illustrated, yet most still don't understand supply/demand when they pay the bill.

Average room rate is $125/night during weekday nites. Supply ( number of rooms available) is higher, demand is lower. Price is lower.

Average room rate friday and saturday nites: average $165.00/nite; demand is higher due to weekend travelers who stay Friday and Saturday nites, so supply is tight and lower, so price goes up.

Average room rate when an event is taking place and there isn't a room available in a 50 mile radius: average $275.00/nite. Supply :none, demand: extremely high, price goes way up.

Simple to see. (Should be) easy to understand.

People still grumble under their breath, or out loud when they cough up the money to pay the bill.

What gets complicated is:

They think it's greed, but when the hotel is completely booked, or now with so many third party options for booking that overbooking happens, supply is non-existent. So price is high. It actually could be higher.

Of course, they also figure it should be $25/nite average on week day nites when there are some empty rooms.
Enter then, into the mix, the basic cost to offer such rooms, as setting the price, even with vacancies. So on weekday nites it is really cost-driven pricing that sets a basic price, for cost plus appropriate profit margin.
Reenter demand. Because demand is higher than giving rooms away, price is stable at the $125/nite rate.

Enter also in, the business man or company that fill a a room or rooms every weeknite, guaranteeing a certain profitable price point at $85/nite for 4 nites per week, every week of the year, including the event weeks ( if such rates are allowed during events at the bargained rate.)

But that price point IS, however, accounted in the weeknite AVERAGE rate.

Supply and demand is simple, but often the waters are muddied by other factors affecting supply and demand...

Thats where people have misunderstandings of the basis of supply/demand.

It is pure greed, as the value of the room didnt change, nor did the services. Did you give them more cable tv channels, room service? Just because you sold out due to travel, doesnt justify the increase in cost when nothing has changed other then less rooms. So you sold out, your end game is to sell out to max your profit, but increasing the cost without increasing the value of the room service is just pure greed.
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Old 08-13-2018, 11:34 AM
 
2,240 posts, read 1,385,700 times
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Quote:
Originally Posted by hitpausebutton2 View Post
It is pure greed, as the value of the room didnt change, nor did the services. Did you give them more cable tv channels, room service? Just because you sold out due to travel, doesnt justify the increase in cost when nothing has changed other then less rooms. So you sold out, your end game is to sell out to max your profit, but increasing the cost without increasing the value of the room service is just pure greed.
What did I just read?
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Old 08-13-2018, 12:03 PM
 
2,360 posts, read 1,026,502 times
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Quote:
Originally Posted by Thatsright19 View Post
What did I just read?
I dont know.. but as a consumer that has to use hotels, i get to see all the greediness in hotel chains.

If i book it online through another provider, can save about 20-30 bucks, so why do i have to go through the hoops when the hotel could be offering the same rate as the online booking.

To max your set profit, your end game is to keep the rooms full, thus having a guarantee income for that week.

125 for weekdays when your at 40%, and still can be kept at 125 on weekends when your at 100%, you still made money as your 125 if budget right cover the 60% that wasnt use for the week.


100 room hotel.

125x100=12,500 a night. Weekend cap.

125x 40=5,000 a night weekday.

Demand will always be on weekends, so you fake raise your room rates to get more profit, when nothing has really changed for the consumer.
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Old 08-13-2018, 12:34 PM
 
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I hate it when demand is high, prices increase, so I am forced to pay more. I'm sure it's pure business 101 to make the most money out of a situation, but it's freaking annoying as a consumer.
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Old 08-13-2018, 12:47 PM
 
2,360 posts, read 1,026,502 times
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Originally Posted by sas318 View Post
I hate it when demand is high, prices increase, so I am forced to pay more. I'm sure it's pure business 101 to make the most money out of a situation, but it's freaking annoying as a consumer.


THIS!! really pure greed more then business. consumer gets the shaft and the business gets a new boat.
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Old 08-13-2018, 12:57 PM
 
2,240 posts, read 1,385,700 times
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Quote:
Originally Posted by hitpausebutton2 View Post
I dont know.. but as a consumer that has to use hotels, i get to see all the greediness in hotel chains.

If i book it online through another provider, can save about 20-30 bucks, so why do i have to go through the hoops when the hotel could be offering the same rate as the online booking.

To max your set profit, your end game is to keep the rooms full, thus having a guarantee income for that week.

125 for weekdays when your at 40%, and still can be kept at 125 on weekends when your at 100%, you still made money as your 125 if budget right cover the 60% that wasnt use for the week.


100 room hotel.

125x100=12,500 a night. Weekend cap.

125x 40=5,000 a night weekday.

Demand will always be on weekends, so you fake raise your room rates to get more profit, when nothing has really changed for the consumer.
Something changed for the consumer. They needed a room urgently enough to pay the increased price.

In other words, the user placed a high enough personal value on having that space at a particular time was worth that price.
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Old 08-13-2018, 01:09 PM
 
1,461 posts, read 330,127 times
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Quote:
Originally Posted by hitpausebutton2 View Post
It is pure greed, as the value of the room didnt change, nor did the services. Did you give them more cable tv channels, room service? Just because you sold out due to travel, doesnt justify the increase in cost when nothing has changed other then less rooms. So you sold out, your end game is to sell out to max your profit, but increasing the cost without increasing the value of the room service is just pure greed.
I'm thinking along the same lines. If you have 100 rooms that will be sold out due to a nearby event regardless of whether they're the non-peak price vs. peak pricing, the rate increase only changes WHO will rent the room and how much the establishment will profit.

I'm not surprised that a hotel, like any business, would want to take advantage of this. "Why take xxx when you can make XXX?"

The people staying in an area near, say, a large sports event who are attending said event halfway expect the prices to be higher during that weekend. However, those who are traveling to that same area for a completely different reason are asked to pay these same elevated prices. If I can't get a hotel under $300 within 10 miles of downtown ATL because of the Taylor Swift concert... I'm surely not the only one affected. Even if 80% of your bookings for a weekend are for attendees to a single event, it sends an implicit message to the other 20% of your guests that chose your hotel based on its merits, not the convenience or proximity for that one weekend.

For people who have lived through a gas crisis (or crises), it reminds them of a time when the price of a product doubled overnight, with no added value - only a decrease in supply. Here in small town America, we call that price gouging. So far, only 35 states have any laws offering consumers protection against this, with the Fed being late to the game and waiting until 2013 to pass legislation on petroleum distillates ONLY. After decades of various price fluctuations - to the point of such practices being deemed customary 0 and still no nationwide laws, I don't think there is any motivation in establishing any. I speculate this is because state taxes for most goods and services are assessed based off of sales price - fuel taxes are per gallon - and with less tax revenue, each state would be likely to ask for more federal funding in the event of a budget deficit.

I don't expect anything to change, but it's really frustrating knowing the cost of a vacation could double due to something you're not even partaking in.
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Old 08-13-2018, 01:54 PM
 
2,360 posts, read 1,026,502 times
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Quote:
Originally Posted by Thatsright19 View Post
Something changed for the consumer. They needed a room urgently enough to pay the increased price.

In other words, the user placed a high enough personal value on having that space at a particular time was worth that price.
When user has no choice ,then what value is their? Like selling water in the desert.. they arent carry nothing more then 2 bucks but you want 20 bucks. would you let them die of thirst because you refuse 2 bucks, because their is nobody in the area selling water.
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Old 08-13-2018, 02:08 PM
 
1,461 posts, read 330,127 times
Reputation: 1663
Quote:
Originally Posted by hitpausebutton2 View Post
When user has no choice ,then what value is their? Like selling water in the desert.. they arent carry nothing more then 2 bucks but you want 20 bucks. would you let them die of thirst because you refuse 2 bucks, because their is nobody in the area selling water.
Or carrying a sign that says "Water, $2", and when you come across someone stranded, adding a zero with a Sharpie. Disgusting.

A less extreme example is no food or beverage allowed into a concert, but you can buy all the Aramark concessions you want at movie theater prices. I've seen tall boys go for $11.50.
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