Re:Buffett Will Steer Investors to Airbnb to Avoid Price-Gou...
by malandrew on Wednesday April 09, 2014 @01:51AM
(#7557835)
No, in this case it actually is price gouging.
If there are 1000 hotels on the market for a certain weekend in month X. Those hotels will see people search for and book a room. Initially those rooms will go for a very low rate. As the date nears, demand will increase and the price of the remaining stock will rise, so that the few rooms that remain as the weekend nears are made available at really high prices.
However if there are 1000 rooms and the hotels know the specific weekend and the nature of the people that will require the use of those rooms and they proactively price all those rooms at very high rates prior to even experiencing the demand, that is price gouging.
If there are 1000 hotels on the market for a certain weekend in month X. Those hotels will see people search for and book a room. Initially those rooms will go for a very low rate. As the date nears, demand will increase and the price of the remaining stock will rise, so that the few rooms that remain as the weekend nears are made available at really high prices.
However if there are 1000 rooms and the hotels know the specific weekend and the nature of the people that will require the use of those rooms and they proactively price all those rooms at very high rates prior to even experiencing the demand, that is price gouging.