Starwood Preferred Guest - Question for Starwood Lurker

Hi,

Quick question for you. I am trying to book 3 rooms for the W New Orleans, for May 18-21, and seem to be getting relatively high rates. The last 3 or 4 times my family has stayed there, we have always gotten rates around $120. Now, the best rate appears to be $189. Is there any particular reason for this 50% increase? I thought with the Lowes being built right accross the street, rates would actually stay the same, of not go down a bit. Thanks for your help.

Best,

EUA Addict

Believe the Lurker is out of the office for a few days.
http://www.flyertalk.com/forum/showthread.php?p=4370607#post4370607

Keep in mind that hotel rates have been increasing across the board lately. See the study from Priceline:
http://www.hotelnewsresource.com/article17468.html

For the record, New Orleans has shown an increase, but nothing like Montreal or NYC.

Are you talking May, 2006? Usually hotel prices depends on occupancy levels and New Orleans sometimes get large conferences. I know when I was there in April, the week before Easter I was getting rates around $90-120 for IC which is lower than normal and when I was suppose to come back for 1 night afterwards, due to a medical conference, it went up to $280+.

This is not a question for the Lurker. This is a general business decision on the part of the hotel owners/operators. William's role here on FT is to manage questions relating (in general) to the SPG program and guest rewards/recognition. He will also help resolve other complex issues that involve hotel ops.

The bottom line is this: if a hotel can charge $2200 a night and fill their rooms, that's what matters. Hotels are for-profit concerns --- as a consumer, we can all choose where we want to spend our $$$. Case closed.

I show no rooms at all to reserve at W MSY.... must be a convention period or something along those lines.

Hotels generally price their rates as high as they they think they can get for a particular season. I would go ahead & book a cancellable reservation (to protect yourself in case the rate goes even higher) - as it gets closer, if the seasonality shows that there is less demand, then the price will drop - if the seasonality shows that demand is greater for their product, it will increase. It's all based on what the customers willing to pay. Just because you were willing to pay 120 last year and they were willing to take that price point, doesn't mean their willing to take you in at 120 this year if another customer is willing to pay 189.

Book the room, make sure it's cancellable, and keep monitoring prices. You have about 10 months til your stay - a lot can happen in 10 months.

Wow, there are many more responses here than I would have expected. In any case, I was just hoping that Starwood Lurker might be able to explain why the price has suddenly gone up over 50%. Considering the significant hotel capacity in New Orleans, I was hoping Starwood Lurker might be able to posit some explanation. Oh well, I will probably just do as suggested, and book a cancelable reservation before the price goes up even more.

I was just hoping that Starwood Lurker might be able to explain why the price has suddenly gone up over 50%. Considering the significant hotel capacity in New Orleans, I was hoping Starwood Lurker might be able to posit some explanation.

I'm largely very pro-consumer, but I do hate when anyone counts anyone else's money. That is, saying "why are the prices so high when there's so much capacity..." sounds like trying to tell them why they should charge less, whereas, asking "if the W New Orleans is always sold out because of conferences, etc., has Starwood considered developing another property in the area so that loyal customers can still give them business at the rates all the other hotels in the area are charging."

Perhaps I'm just picky about semantics, if so, I apologize.

Steve

I'm largely very pro-consumer, but I do hate when anyone counts anyone else's money. That is, saying "why are the prices so high when there's so much capacity..." sounds like trying to tell them why they should charge less, whereas, asking "if the W New Orleans is always sold out because of conferences, etc., has Starwood considered developing another property in the area so that loyal customers can still give them business at the rates all the other hotels in the area are charging."

Perhaps I'm just picky about semantics, if so, I apologize.

Steve

I was just wondering if there was some big conference I didn't know about, or whether perhaps that prices simply tend to be higher this far out (and then adjust accordingly, if at all, depending on demand).

I was just wondering if there was some big conference I didn't know about, or whether perhaps that prices simply tend to be higher this far out (and then adjust accordingly, if at all, depending on demand).

Here are the conventions that have been currently booked for the month of May 2006. The number on the far right is the number of expected attendees.


AMER ASSN OF ORTHODONTISTS 04/28/06 05/02/06 16,000
NEW ORLEANS JAZZ & HERITAGE FESTIVAL 04/28/06 05/08/06 80,000
AMER FED OF LABOR & CONG/INDUSTRIAL ORGNS 04/30/06 05/02/06 700
ASSN OF TRIAL LAWYERS OF AMER 05/03/06 05/07/06 175
ONCOLOGY NURSING SOC 05/03/06 05/06/06 6,000
SE ELECTRIC EXCHANGE, INC 05/03/06 05/04/06 35
INTL LUTHERAN WOMENS MISSIONARY LEAGUE 05/05/06 05/06/06 250
PARENTERAL DRUG ASSN 05/07/06 05/09/06 200
INTERGRAPH, INC 05/07/06 05/11/06 1,500
COMMUNICATION TECHNOLOGIES, INC 05/07/06 05/09/06 500
THE DARK GROUP, INC 05/08/06 05/10/06 500
SOURCEMEDIA 05/09/06 05/12/06 6,000
COACHVILLE, LLC 05/09/06 05/12/06 1,000
HELEN BRETT ENTERPRISES 05/16/06 05/23/06 300
NATL CONF FOR NURSE PRACTITIONERS 05/18/06 05/20/06 1,000
B BATTERY 6TH MISSILE, 562 ARTILLERY 05/19/06 05/20/06 150
NATL CABLE & TELECOMMUNICATIONS ASSN 05/20/06 05/23/06 17,000
NATL SKI AREAS ASSN 05/23/06 05/27/06 800
NATL ASSN OF PROFESSIONAL PROCESS SERVERS 05/25/06 05/27/06 275
US VOLLEYBALL ASSN 05/26/06 06/02/06 5,000
NATL NOTARY ASSN 05/29/06 06/02/06 600
AMER COLL OF VETERINARY INTERNAL MEDICINE 05/30/06 06/03/06 4,000
ASSN OF FAMILY & CONCILIATION COURTS (AFCC) 05/30/06 06/02/06 800
SOC OF AMER MILITARY ENGINEERS 05/31/06 06/01/06 2,000
RED HAT SOC 05/31/06 06/04/06 6,000

Hotels generally price their rates as high as they they think they can get for a particular season. I would go ahead & book a cancellable reservation (to protect yourself in case the rate goes even higher) - as it gets closer, if the seasonality shows that there is less demand, then the price will drop - if the seasonality shows that demand is greater for their product, it will increase. It's all based on what the customers willing to pay. Just because you were willing to pay 120 last year and they were willing to take that price point, doesn't mean their willing to take you in at 120 this year if another customer is willing to pay 189.

Book the room, make sure it's cancellable, and keep monitoring prices. You have about 10 months til your stay - a lot can happen in 10 months.
^ ^ ^

That's the way things work (and the above poster definitely knows what he's talking about ;) ). Just keep monitoring those rates, and cancel/rebook if and when they drop! (Also look for specials and promo rates.)

As to the question of "why" that the OP keeps repeating, I suggest you re-read the above quote a few times. It's all based on forecasts, and on charging what the market is predicted to bear.

Also note that rates vary from day to day, depending on day of week as well. Sometimes, Sunday nights are cheapest. Since the Starwood website won't book multi-rate stays, you might also look at one-day time periods and make separate bookings if there is a day or days that are cheaper than others. For example, if some particular night, such as Sunday, is cheaper than the other nights that you want, book that night separately to take advantage of the lower rate. @:-)

Yes this may sound like a totally STUPID question, but it has always mystified me why airlines, hotels and car rental agencies can get away with raising and changing prices hour to hour and putting them through the roof based on demand and it not be considered price gouging.

If we are having a horrible winter or there is a storm and gas prices get jacked up or generators are being sold for 3 times their normal price the state's attorney general goes after the companies for price gouging. Arent they doing the same thing as the hospitality industry? The demand is higher, they are forecasting they can sell more, so they jack up their prices.

Why is one legal and the other not???? I personally think an airline, hotel or car rental agency could win over a HUGE following if they set a price for their service and stuck to it (obviously with periodic increases for cost of living and so on, but just not this hourly roulette wheel pricing). I know I would change my current loyalties if such an option existed. I think its nuts that one week I stay at a property for $69 and the next the same room with the same service is $239. What am I getting any better...NOTHING!

Yes this may sound like a totally STUPID question, but it has always mystified me why airlines, hotels and car rental agencies can get away with raising and changing prices hour to hour and putting them through the roof based on demand and it not be considered price gouging.

If we are having a horrible winter or there is a storm and gas prices get jacked up or generators are being sold for 3 times their normal price the state's attorney general goes after the companies for price gouging. Arent they doing the same thing as the hospitality industry? The demand is higher, they are forecasting they can sell more, so they jack up their prices.

Why is one legal and the other not???? I personally think an airline, hotel or car rental agency could win over a HUGE following if they set a price for their service and stuck to it (obviously with periodic increases for cost of living and so on, but just not this hourly roulette wheel pricing). I know I would change my current loyalties if such an option existed. I think its nuts that one week I stay at a property for $69 and the next the same room with the same service is $239. What am I getting any better...NOTHING!

I dont suppose it might have occured to you that the $239 is the "normal price" and the $69 is the "discounted price" ?
You are not suggesting that hotels like all other businesses like supermarkets and department stores not allowed to discount their prices are you?
There are very few if any commodities that you cannot buy at a discount in our society.

Its just the simple old supply and demand capiltalist system at work, dont like rates SPG charges one can always rack up a tons of points at a Motel 6. :D

mike

I'd have to agree here - if you compare rack rate year over year, you wouldn't see that much change (guessing here, I didn't go check).

However, discounts change substantially.

Seems like you have your probable answer.

NATL CABLE & TELECOMMUNICATIONS ASSN 05/20/06 05/23/06 17,000

It's the cable guys coming to town.

Care for some cheese with that whine?

I dont suppose it might have occured to you that the $239 is the "normal price" and the $69 is the "discounted price" ?
You are not suggesting that hotels like all other businesses like supermarkets and department stores not allowed to discount their prices are you?
There are very few if any commodities that you cannot buy at a discount in our society.

Its just the simple old supply and demand capiltalist system at work, dont like rates SPG charges one can always rack up a tons of points at a Motel 6. :D

mike

Actually the $69 is the somewhat regular for the property I had in mind. Lets be honest, discounting is the rarity. Normally it is price raising that we are seeing.

If you need a great example look at hotels during Nascar race weekends. Most hotels at least TRIPLE their average rate for race weekends. You are getting no better service, if anything you get worse because there are so many people in town and the staff is spread thinner, but just because they have a captive group of people the rates go through the roof.

You used the example of a grocery store. You dont think people would be up in arms if instead of $3 for a package of hot dogs on July 4th weekend the price went to $12 cause a lot of people want them? Or how about if hourly the grocery store changed all their prices depending on how many carts were being used.

My issue (more a curiousity) is why hotels, airlines, car rental agencies are allowed to how these huge fluctuations in prices based on demand while the government makes that illegal for other areas of commerce.

Per your SNIDE motel 6 comment, I wasnt saying I wasnt happen with anyones rates (for the record I am about to become a Hilton Diamond and am a SPG Gold, obvioulsy staying cheap is not my issue). I was asking a legitimate question about pricing and the economy!

Yes this may sound like a totally STUPID question, but it has always mystified me why airlines, hotels and car rental agencies can get away with raising and changing prices hour to hour and putting them through the roof based on demand and it not be considered price gouging.

If we are having a horrible winter or there is a storm and gas prices get jacked up or generators are being sold for 3 times their normal price the state's attorney general goes after the companies for price gouging. Arent they doing the same thing as the hospitality industry? The demand is higher, they are forecasting they can sell more, so they jack up their prices.

Why is one legal and the other not???? I personally think an airline, hotel or car rental agency could win over a HUGE following if they set a price for their service and stuck to it (obviously with periodic increases for cost of living and so on, but just not this hourly roulette wheel pricing). I know I would change my current loyalties if such an option existed. I think its nuts that one week I stay at a property for $69 and the next the same room with the same service is $239. What am I getting any better...NOTHING!


I spent many years working in the hotel industry. Hoteliers sell a moment in time. Once that moment has passed, they no longer have the ability to sell it. Using your example about gasoline to illustrate, if your local Mobil station doesn't get your business today because you filled up at Sunoco, they may get someone else's business instead. However, if they don't get anyone else's business, they can still sell that SAME gas the following day for a profit. If a hotel leaves a room open tonight, they have no opportunity to recoup that profit other than on future nights. Remember, you can always choose not to travel at a peak time. Just like you could choose not to put gas in your car. Enjoy the walk!! :D

Remember, you can always choose not to travel at a peak time.

Fortunately or unfortunately depending on your point of view, for many of us the choice to travel during peak time is not an option, as the travel is for work.

I have NO issue with hotels having peak season and off peak season rates, what I am questioning (and no one is answering) is how they are exempt from price gouging guidelines. If there is a hurricane and I sell you a generator for 3 times its price I can be fined, thrown in jail and put out of business. But if during the same hurricane I sell you a hotel room for 3 times its price I am within the law. I dont get the double standard on on this.

Fortunately or unfortunately depending on your point of view, for many of us the choice to travel during peak time is not an option, as the travel is for work.

I have NO issue with hotels having peak season and off peak season rates, what I am questioning (and no one is answering) is how they are exempt from price gouging guidelines. If there is a hurricane and I sell you a generator for 3 times its price I can be fined, thrown in jail and put out of business. But if during the same hurricane I sell you a hotel room for 3 times its price I am within the law. I dont get the double standard on on this.
The regular price is the RACK rate. In some provinces and states you will see it clearly printed on a form on the door or in the closet- as required by state/country/provincial law- often this rate is also the MAXIMUM the hotel can charge. Any rate below the RACK rate is considered a discount- and the revenue yield management department can allocate a capacity. Hotels are not exempt from pricing restrictions- but they, as with many other businesses, are permitted to offer discounts to customers or select groups of customers. It is great that this occurs- as both the customer and shareholder benefit.
Hotels do not charge three times the price as you have stated- in fact in emergencies you will find hotels typically offer a compassionate rate or the ability to change plans without penalty. There is not a double standard occurring.

...what I am questioning (and no one is answering) is how they are exempt from price gouging guidelines...
This has been answered. They don't raise their rates above Rack rate (which is the "normal" cost of the room). They just don't offer any discounts that we've all become accustomed to.

Fortunately or unfortunately depending on your point of view, for many of us the choice to travel during peak time is not an option, as the travel is for work.

Whatever.


But if during the same hurricane I sell you a hotel room for 3 times its price I am within the law. I dont get the double standard on on this.

Actually, you're wrong. If a hotel did this specifically, they would be fined. By law, they are required to accept patrons during states of emergency, even if they cannot pay (in most jurisdictions). The original example involed a conference in town that is driving up rates. You are not going to suffer bodily harm by not being able to stay at your first choice hotel because there is a conference in town. You could always stay at the local YMCA or hostel if you can't afford a hotel. A hotel's demand is elastic EVERY DAY.

I own burger restaurants (Five Guys Burgers). If people choose to stop paying my price for burgers, I don't have sufficient demand at that price, so I may have to lower my price. However, if the line is out the door, I might move my prices up. If, over a period of a month or two, I realized I wasn't making enough profit, I could either cut my cost or raise my prices. I just don't raise and lower it every day, because then I would have to reprint menus, etc. A hotel doesn't have to reprint ANYTHING, unless they want to change the rack rate printed on the back of your door.

But if during the same hurricane I sell you a hotel room for 3 times its price I am within the law. I dont get the double standard on on this.

Pizzaman is right, this can be illegal and you can find many recent examples on the website of the Attorney General of Florida (not sure of the laws of Louisiana):
http://myfloridalegal.com/catalog.nsf?SearchDomain&Query=hotel%20AND%20price%20AND%20gouging&Start=1&Count=30

BigJim, thanks for posting the list of upcoming conferences. This seems to answer my original question, and is all that I really wanted to know. Thus, by the looks of it, it appears that the reason the price went up (and now is sold out) is b/c of the "NATL CABLE & TELECOMMUNICATIONS ASSN" conference that is going on that weekend.

On a different note, I found it a bit odd that I was able to find my family a better rate at the Ritz Carlton, as opposed to the W French Quarter. I realize that this has more to do with the respective supply/demand curve/pricing models everyone has posted about, but I was surprised nonetheless (I thought the RC would have been more)

BigJim, thanks for posting the list of upcoming conferences. This seems to answer my original question, and is all that I really wanted to know. Thus, by the looks of it, it appears that the reason the price went up (and now is sold out) is b/c of the "NATL CABLE & TELECOMMUNICATIONS ASSN" conference that is going on that weekend.

On a different note, I found it a bit odd that I was able to find my family a better rate at the Ritz Carlton, as opposed to the W French Quarter. I realize that this has more to do with the respective supply/demand curve/pricing models everyone has posted about, but I was surprised nonetheless (I thought the RC would have been more)
It's great that you did the research and found a better deal! ^

A lot of people assume that one brand (especially a luxury brand) will be always more expensive than another. Often that's true, but not always.

I have NO issue with hotels having peak season and off peak season rates, what I am questioning (and no one is answering) is how they are exempt from price gouging guidelines. If there is a hurricane and I sell you a generator for 3 times its price I can be fined, thrown in jail and put out of business. But if during the same hurricane I sell you a hotel room for 3 times its price I am within the law. I dont get the double standard on on this.

Actually in Florida after each hurricane season a couple of hotels do get hit with price gouging - but it is rare. After the state declares a state of emergency hotels cannot charge higher than a percentage of an average of the rate charged for a preceeding number of weeks.

The comment was made earlier that is correct. All hotels have a published rack rate posted in the room that they are not allowed to charge higher than that rate. If they choose to discount from that rate they can.

There's no law breaking going on. Just supply and demand. After all, you do have a choice to stay there .

Why aren't you ranting over airline pricing as well?

So, I'm guessing that this is a question I no longer need to answer? ;)

Sincerely,


William R. Sanders
Customer Service Coordinator
Starwood Preferred Services

guest.forum@starwoodhotels.com

A hurricane was just an example. Since that one seems to have elicited anger in many how about at least 3x the normal rate because a race is in town?? This has been WELL documented (NASCAR themselves has tried to stop the hotels on doing this). If a gas station in town raised their prices 3x because the race was in town it would be gouging, but a hotel it is totally acceptable practice. It just seems like the hospitality industry has a license to screw clients over at will without any true guidelines on their priceing!

A hurricane was just an example. Since that one seems to have elicited anger in many how about at least 3x the normal rate because a race is in town?? This has been WELL documented (NASCAR themselves has tried to stop the hotels on doing this). If a gas station in town raised their prices 3x because the race was in town it would be gouging, but a hotel it is totally acceptable practice. It just seems like the hospitality industry has a license to screw clients over at will without any true guidelines on their priceing!

Again, you're wrong. Based on the laws of supply and demand, if a gas station raises their prices 3x the market, they probably won't get any business, since the other gas stations did not raise their prices accordingly. If they all raised their prices at the same time to the same number, FTC might have some issues with collusion. If NASCAR wanted to reduce the hotel rates, they could do what large conferences do, and guarantee a room block. They would then have to sell these rooms themselves. This is how large organizations hold the rate down for their members. Other than that, supply and demand holds things like that in check.

Pizzaman is completely correct - once a day passes - that hotel room is no longer valuable or sellable - time has passed. Also, another way of looking at it is once a room is sold, it's sold. When you have a customer who is willing to pay 189 for a room, why sell it to the customer who is only willing to pay 129 for that same room? Also, pretend you have a hotel that has 10 rooms and its open for 5 days only - say you sell 7 rooms on Monday, 8 on Tuesday, 8 on Wednesday, 6 on Thursday, and 2 on Friday. Now, you've got basically on 3 rooms left on Monday, 2 on Tuesday and Wednesday, 4 on Thursday, and 8 on Friday. You want to maximize your profit as a hotelier. You may want to not let the customer that's paying 129.00 come in on Tuesday or Wednesday since you only have 2 rooms, but you'd let them come in on Thursday or Friday since you have more than enough rooms left to sell. However, maybe if that customer came in for 3 nights on Tuesday or Wednesday, you'd sell him a room for 129/night because it's more profitable in the long run, but if they only want to come in for 1 night, they're paying 189. It's all about supply & demand and economics.

Just a quick thing regarding Nascar & it's effects on hotel pricing - yes, when a Nascar rase comes into a small town area, all the hotels in the area are effected & all of them raise their rates (for the most part) - the fact of the matter is that a lot of times, hotels will raise their rates. This doesn't always effect the business traveler. In some instances, a hotel that may raise its rates to 189/night when during Nascar when it's regular rate is 89/night isn't necessarily gouging the customer - it's providing a product to a customer who is willing to pay for it.

Sure the room is no different - however, since the entire city is selling out and the demand is there & it outweighs supply (simple economics) then that means the hotel can and will charge a premium for its rooms. However, business travelers and regulars can often get in at their regular rates. A customer who goes to the same hotel every week or two for business probably has a negotiated corporate rate and can get that rate during the special event if they call the hotel directly more often than not - special events are special events and that's what a Nascar race is.

Are you suggesting that a Times Square NYC hotel shouldn't be allowed charge more on New Years Eve?

Don't forget that the price points also segment the customers - whereas it may not be an intentional consequence - although a hotel's rack rate may be 89/night & the AAA rate may be 79/night - the hotel may not want the all of the race-going clientele staying at its property. And no offence to race goers - my old roommate is a huge Nascar fan & heads down to Taledega (sp?), Richmond, and Charlotte for races all the time - but some hotels may not want the beer-drinking loud & drunk clientele. Business travelers are often less demanding & less needy than non-business travelers & the majority of hotels other than destination markets are designed for business travelers.

(side note - Pizzaman - I love Five Guys - good to see the owner is an FT'er!! I just moved near the one in Falls Church & haven't had the opportunity to try it out yet, but may head there for dinner tonight since it's now in my mind! I used to hit the one up near Skyline all the time when I lived near there! Great stuff!)

(side note - Pizzaman - I love Five Guys - good to see the owner is an FT'er!! I just moved near the one in Falls Church & haven't had the opportunity to try it out yet, but may head there for dinner tonight since it's now in my mind! I used to hit the one up near Skyline all the time when I lived near there! Great stuff!)

Well, I don't own Five Guys. My business partner and I are franchisees of the concept. We are currently the largest franchisee. We have three open right now, with a fourth due to open in Tysons Corner in September. Any FTers that want to come to our invitation-only pre-opening party, just drop me a line.

I am coming back to a subject mentioned earlier in this thread : hotel prices when there is an emergency situation...


See what happened in London after the attacks on July 7th (I don't mean this is related to the Starwood group) :


Extract from the BBC News site
http://news.bbc.co.uk/1/hi/uk/4662809.stm



Friday, 8 July, 2005, 18:53 GMT 19:53 UK

Hotels 'cash in' on bomb attacks

Hundreds of commuters spent Thursday night stranded in London and some have accused hoteliers of cashing in on the bomb attacks.

Prices at a number of London's hotels increased by more than double on Thursday night, the BBC has learned.

Lastminute.com said price rises for hotels featured on its site had been set by hotels themselves.

However, some hotels offered blankets and use of showers for free and other businesses donated goods to casualties.

The attacks on the Tube network and a double-decker bus killed at least 50 people and injured more than 700.

'£250 room'

A Trading Standards Institute spokesman said hotel profiteering after a bombing attack was reprehensible.

With the transport networks down and no way of returning home, one businessman from Manchester told the BBC he had paid £250 for an £80 room.

Commuters said they were appalled, and thousands chose to walk for hours to reach home rather than stay the night in a hotel.

A spokesman for the British Hospitality Association, which represents hotels, said he was surprised by the increases.

Grant Hearn, the CEO of hotel chain Travelodge, said the price rises were a "disgrace".

"Travelodge is outraged to hear reports of hoteliers taking advantage of the situation to increase rates and deplores the idea that anyone should have had the insensitivity to take advantage of the tragic circumstances," he said.


"That type of behaviour has gone, and was never acceptable in the first place. It makes us all look bad.

"It's outrageous, and I believe the companies doing this should be named and shamed."

The BBC News website received e-mails from readers who said higher than expected prices were charged by some hotels belonging to the Thistle Group.

A Thistle Group statement said: "Following press speculation Thistle Hotels would like to confirm that it did not raise its hotel prices as a result of the tragedy that occurred on 7 July 2005.

"An emergency conference call took place at midday with all London, Heathrow and Gatwick hotels to discuss the incident and to confirm that there would be no rise in prices and other contingency instructions were issued."





I suppose this will lead to several court cases in the UK...