Texas is experiencing a weather event it hasn’t seen in a generation. We don’t do single digit temperatures, negative wind chills, and significant snow. The problem compounded when the state’s electric grid couldn’t handle demand. Freezing temperatures took some power generation offline (due to frozen natural gas pipes) at a time when everyone cranked up their heat.
The manager of the state’s electrical grid (which – for the most part – isn’t connected to either the US-East or US-West grids, avoiding federal regulation) ordered local utilities to do rolling blackouts to reduce consumption. Homes were supposed to lose electricity for 10-45 minutes at a time. In reality people have lost power in some cases for more than a day. In Austin everyone lost power that doesn’t share a switch with an essential service like a hospital or fire station.
Local residents without power are complaining about hotel price gouging. Yet I see:
- The downtown Hotel Indigo is bookable for $72
- The Hilton Garden Inn in Cedar Park for $76
- DoubleTree by UT Austin for $68.
Now, the Fairmont is asking $421 and the Four Seasons $1406 – but the Four Seasons is actually sold out if you go to their website, so what online travel agencies are doing here can’t be blamed on the Four Seasons itself.
It’s strange to criticize hotels, browbeaten by the pandemic with many closing their doors, or profiting too much. How about losing less money on a handful of nights?
- All of a sudden people want to stay in hotels that have electricity and heat. That alone is a limited set of the hotels in town.
And with roads impassable in many cases, the hotels with electricity and heat have a hard time with being staffed.
- That there are rooms bookable, and at reasonable prices for real-time check-in, suggests there’s not a problem here, even if you want to complain that the Fairmont’s current rates are higher than pandemic pricing.
And by the way hotels have seen a surge in demand as the airport shutdown due to the weather event, too, so flyers had to make unplanned extensions of their stays (though this is offset by people not flying into Austin – though not always cancelling bookings, so hotels may not know in advance how much inventory is being freed up).
Full hotels charge more for their last rooms, especially if their inventory is being managed away from the property level. This stuff is automated, or being handled by people outside the state – either at the chain-level or by an ownership group that usually isn’t local.
Focusing on hotel room rates rather than those managing the electric grid and lack of long-term planning (this has happened before) seems to be a mistake. And the state is actually telling the grid manager to raise prices on local utilities and to do so retroactively. Higher prices are an important signal for conservation and investment, though it’s unclear what retroactive price changes do other than shift cost burdens. And if we realize the importance of price signals for shifting resources and investment, why can’t we do that consistently and stop complaining about hotels?
I’m currently stuck at home, fortunate to have power because I wouldn’t be able to make it on the roads to a hotel right now in any case.