Hotels Called Out For Price Gouging As Unprecedented Weather Event Hits Texas Electrical Grid

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.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. “The Texan who said “You’re gonna have to pry my gun from my cold hands” never actually dealt with snow.” -@MarkNorm on Twitter

  2. Some wind turbines froze. Others, especially offshore, produced more energy than expected. As a net, wind energy outproduced expectations – the only form of energy to do so. Last night when I was checking, it was overproducing by several thousand megawatts. Thermal plants, especially gas, accounted for almost all of the power that went offline.

    Wind has outproduced the entire weekend, despite a number of turbines freezing. That might convince them to install ‘cold weather packages’ on the turbines, as they kinda-sorta said should have been done after a similar incident in 2014. That’s how turbines along the North Sea run reliably despite the weather.

  3. The wind turbines freezing a lie that needs to be corrected. As of Monday afternoon, 26 of the 34 gigawatts in ERCOT’s grid that had gone offline were from “thermal” sources, meaning gas and coal.

  4. @JetAway….wind power accounts for 17% of Texas’s power so you and I have different concepts of the phrase “highly dependent”.

  5. Glad you have electricity, Gary.
    I have many friends in Texas that don’t and are not heading to hotels.

    Generator sales will skyrocket. In the past, people bought them primary for summer weather. Most hotels have them – but they also use – gasp – natural gas – to heat water. Oh the horrors of burning dead dinosaurs to stay warm. Heat pumps are widespread in Texas but they don’t work at these levels of cold; they just revert to becoming inefficient electric heaters.

    Obviously someone didn’t do anywhere near enough research to find the limitations of wind technology. The fact that Texas jumped in so hog wild to wind technology when they are sitting on oodles of gas (much of which is a product of fracking) requires a serious reassessment of energy policy.

    It is beyond excusable what is happening in Texas. Those that use old technology to keep warm should be commended, not ridiculed.

  6. I bet the Cruze and Cornyn homes are toasty and lit up.
    Hope a big storm hits Florida next.
    Maybe then Texas can finally be free to join Mexico and Florida Cuba and the 48 remaining states will be very happy.

  7. Wind is the only form of power that actually met expectations. Why are people still parroting this line about wind failing? Of the 30+ GW that went offline, 27GW was gas turbines. At least one coal plant and at least one nuclear facility went offline. Yes, some turbines froze, but others made up for them (and, it was the owners’ fault for not including features that let them operate down to well below 0).

    In fact, for the entire weekend and continuing today, ERCOT has shown wind actually making up for several gigawatts of thermal generating capacity that collapsed.

    What do you all think turbines in Scandinavia do, just freeze up during the winter while they all just throw up their arms and shrug?

    Try to read more than headlines.

  8. I can’t be the only nerd who’s read the “maximum room rate notice” on the back of the door of every hotel room ever. I sometimes get a chuckle when I see the maximum rate on a single room in a Courtyard in Missouri is something crazy like $750; but technically that wouldn’t be gouging, would it?

    And wind power? Lots of cold countries (e.g. Sweden) have wind power, but the TX turbines probably don’t have de-icing technology installed. Someone needs to re-do the cost/benefit analysis on that.

  9. @Robert-According to today’s WSJ, wind accounts for 23% of Texas’ power, which is very significant if virtually all of it is suddenly not available.

  10. Gee – the TX power system is not connected to the national power grids because TX wanted “to avoid federal regulation”. Yet they were quick to ask for federal assistance via FEMA (which was quickly granted by the current administration without any gamesmanship maneuvers like the former administration often played with some states).

    C’mon Texans, you need to get out there and rake the snow!

  11. @JetAway The issues are more complex than frozen turbines, but blaming green power draws clicks. And stating, “virtually all of it is suddenly not available” is just misinformed. The operating wind turbines are actually generating much more power per turbine than projected. The bigger issues are the natural gas plants that are offline for maintenance and the tight supplies of natural gas for the working plants, resulting in low pressure, which limits output.

  12. The big problem with wind & solar power is that they’re not consistent. Get a cloud moving over even a fraction of a solar panel and its output drops to zero. Wind is extremely variable. Major power plants aren’t like cars — there’s a throttle but it takes tens of minutes to ramp up/down, whereas the wind/solar energy fluctuates much more quickly.

    Diesel & natural gas generators fill the gap and act as a buffer between the big plants & the renewables. Perhaps one day we’ll have battery technology that can handle this function, but even optimistically that’s 20+ years away until it’s actually installed and running. Ironically, the addition of renewables also means that some major power plants operate less efficiently, due to them being built to carry the full load and the peak/most efficient operating curve designed for it.

    I love solar myself and have been playing with solar for 20+ years…but I’ll be the first one to say that it’s not as “green” as its made out to be.

  13. AlexS, that’s why planners use a percentage of the nameplate capacity as the capacity factor. Do you actually think you’ve uncovered a problem about wind energy that much smarter people have not uncovered and accounted for?

    You act as though someone is suggesting throwing up a windmill and then praying to the gods that the wind doesn’t stop blowing or else the city goes dark. This is why wind energy plants are geographically dispersed over entire grid systems. This is why wind power actually was “punching above its weight” in Texas all weekend – if not for the thousands of extra power generated by wind turbines – over and above their expected output – more people would be frozen.

  14. I’m in Sweden today and even a good part of the water between Sweden and Denmark is frozen — frozen solid enough in parts that a few people this past weekend have been ice skating about 1/2 of a mile or more offshore, some even playing ice hockey way out over the frozen sea water. The wind turbines were working like usual. Blaming cold weather for wind turbines not producing energy misses the mark; and blaming wind energy reliance for Texas’s problem also misses the mark in multiple ways. But give it to the Lord Trump worshippers to be hitched to fighting a pitched battle in their culture war against non-fossil fuel sources of energy and thus eager to attack wind-powered energy despite the utility of having a lot of wind-powered energy included in the power mix. But isn’t this power issue in Texas a function of Texas interconnection being what it is because the Texas political establishment and their fans didn’t want to be subject to federal regulation? Yes, this is the consequence of Texas’s anti-federal government streak and opposition to being subject to more regulation and regulatory parties.

    I recall some very icy slippery steps outside in Houston at least once, extremely rare as ice was there. And that was Houston and not some inland part of north or central Texas. So can’t say I’m surprised that a chilly storm hit Texas again.

  15. Nice of Bob to wish a big winter storm on Florida, a state with a large elderly, black and Hispanic population ill equipped to handle freezing weather. Sounds like Bob has the same moral compass as Democrat Governor Andrew Cuomo when it comes to bringing harm on the elderly and minority populations.

  16. Shucks. I thought Global Warming would keep me nice and warm, no reason to buy a generator. I guess that was fake news. Bring on the new Ice Age! RIP Fake Global Warming.

  17. First, insulation is a very good thing. More insulation = less money spent on energy to heat and cool.

    If you are heating your house with electricity – most little generators and batteries will not help you. Too much power draw. If you are heating with Gas, then you need very little electricity to run a boiler, pump, or hot air furnace. Geothermal works well and also requires almost no electricity. I would think there people who know how to drill pipes in Texas.

    If I lived in Texas, and wanted to Hedge to keep warm without power…I’d be buying a camping heater (or two). They’re cheap, run on BBQ tanks, and have CO2 shutoff mechanisms. Most of the little ones are indoor rated.
    If I wanted to live it up a little more, I’d add a little gas inverter generator. That way I could power an internet and/or a TV or two.
    I’ve lived through many outages with less.

    Utilities have been bashed by the consumer for so many years on keeping their costs down. As such they’ve eliminated a wide bit of repair crews and maintenance to save money.

    No matter what form of power generation you have, or where you live in the lower 48 – it’s the new reality. Get used to it.

  18. “We don’t do single digit temperatures”

    In Centigrade, you do. Anyway, I’m showing the current temp in Austin at -5C.

  19. I’m gonna call it a net plus that there’s now only a few Republican wackos here sprouting their idiocy:
    -Global Climate change is a Hoax!!
    -Trump really did win the election!!
    -Green Energy in Texas is Evil!!

    …and, hopefully “it” will die down as time goes on as they’re remembered as the Know-Nothing party of the 2020s.

  20. @Zack, great idea. Now what do you do when there are rolling blackouts in the summer because it’s too hot. That happens every year in TX, and it’s happening a lot more frequently now. But as everyone has rightly pointed out climate is not only temperature.

  21. @Truth – a lot of the racists/white supremacists/hoaxers who used to frequent this site went back into their underground holes after the Trump shellacking 11/3, and after somehow he didn’t overturn the will of the people…good riddance

  22. I see UA-TDS can’t stop talking about the Bad Orange Man. In his mind anyone who didn’t support a Harris-Biden administration with Joe Biden, our Savior, as President is a racist incel while those who acknowledge Joe Biden as our Savior are Chads. Only Chads can fly on and off boxes while wearing a “THIS IS WHAT A CURB-STOMPING FEMINIST LOOKS LIKE.”

    Trump lost by a margin of about 44,000 votes in swing states. There is no national popular vote for President. Please read the Constitution.

  23. You cryhards could not stop crying about bad orange man for 4 years and you STILL talking about it? You think he is thinking about YOU? The billionaire with a supermodel wife? Doubt it. Scrubs.
    Get over it already and applaud your hypergendered laughing stock of the world Biden/CCP administration. 72 Executive Orders in the first month -mmmm smells like Stalin!

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