Quote:
Originally Posted by aerogt3
That's just not true, and shows a big ignorance of basic economics. A hotel price is not a rip off if the price spike is demand driven.
The hotel industry may keep up with time averaged demand over a year or a seasonal period of the year, but within those aggregate periods, are nights where they have way less (or way more) rooms than the current market demand.
That's why prices rise during comicon, and can be absurdly low on a Wednesday night in the off season. A hotel's viability rests on the balance between under supply (and higher margins) in periods of high demand, and oversupply (and losses) during low demand periods. To get comicon prices in line with what you would consider acceptable, hotels would need to be sized for the years largest event, and would be unprofitable due to the oversupply/low occupancy such sizing would create on an annualized basis.
As it stands, even in San Diego's best years, hotel occupancy is about 77% (source below). Effectively any additional rooms to alleviate what you think are comicon "rip offs" would essentially be vacant most of the year; an inefficiency for which an even larger pool of hotel customers would have to pay higher rates (or, the hotel goes out of business.) Alternatively, if comicon rates were so high that hotels could cover the loss incurred on an additonal room for the rest of the year, than hotels would build that room.
http://www.sandiegouniontribune.com/...217-story.html |
Hotels get cheaper as occupancy gets lower.
If occupancy was below equilibrium (varies by city, often in 70s), typically the worst case is an owner sells at a loss, then the buyer does better because they bought the property at a discount. (This gets complicated with the owner and operator, aka flag, often being different, and the operator taking a share of the risk.)
Actually the most relevant number is RevPAR or revenue per available room.