As volcanic ash continues to fill the airspace over Europe and the United Kingdom, cash continues to fill the pockets of hoteliers jacking up prices for travelers stranded by grounded flights throughout the world.
Tourists stuck in Singapore, en route to the U.K. and Europe, for example, say they are looking at paying at least US$300 more than the normal rate for a one-night hotel stay, according to an ABC News article.
 |
| Ash from the Eyjafjallajokul volcano in Iceland, similar to ash from the Semeru volcano in Indonesia (pictured here), has grounded air travel above the U.K. and much of Europe. |
|
“I lost an opportunity this morning when someone offered me a room for (US)$300 above the rate and it was a case of she who hesitates is lost,” said Kate Edmondson, a traveler who was set to fly from Sydney to Dublin via Singapore on Thursday. “I lost that room and once I rang back it was all gone. I really should have taken that room.”
Call it the ash for cash hotel grab.
An intriguing dilemma
The situation presents an intriguing dilemma for these hoteliers (let alone the travelers struggling to find a roof over their heads without losing the shirts on their backs). That is, how do you balance hospitality with opportunity?
Yield management is fueled, in part, by this relationship—generating the highest possible room revenue given the demand for a particular room on a given night. Surely no one would fault a revenue manager for raising prices during the weekend of a major sporting event that brought in thousands of rabid fans? The same goes for peak seasons or holidays.
But when smart rate management meets price gouging, are the lasting effects worth the short-term gains?
Let’s revisit the situation of Kate Edmondson. Stranded in Singapore, she’s struggling to find any hotel room (a frustrating situation in and of itself), let alone one that doesn’t boast a US$300 mark up. Now, let’s say she does find a room at Brand A—but at a cost. She pays US$200 more than the average rate. So she stays at Brand A. Already upset with her predicament, she’s now even angrier because she believes she’s being price gouged. Might she harbor a grudge against Brand A? Will she avoid Brand A in the future?
The above example is purely hypothetical, but it’s something to keep in mind during periods of crisis/opportunity—especially given there are tens of thousands of Kate Edmondson’s throughout the world right now. While it’s obviously important to capitalize during times of great demand, the short-term play should never compromise the long-term game plan or the underlying premise of hospitality.
Consumers: speak out! So how do you feel about prices escalating during this situation? Do you feel taken advantage of, or are you chalking it up to increased demand means higher hotel rates? Please voice your opinion in the comments section below, or by e-mailing me at patrick@hotelnewsnow.com.
Hoteliers: speak out! So how would you handle this ash for cash hotel grab? Would you drive rate in line with your competitors, even if that meant you were price gouging your loyal customer base—if only for a few nights or weeks? Or would you offer more affordable, hospitable accommodations on a first-come, first-serve basis? Please voice your opinion in the comments section below, or by e-mailing me at patrick@hotelnewsnow.com.
