Forgotten Toothpaste and World Cup Rates

A couple of weeks ago I checked into a hotel and realised that I had forgotten my toothpaste. There were no shops open and so I called the front desk. They didn’t have any toothpaste to sell me, even though I probably would have paid $10 for a tube that night. I might have even paid $15 but I doubt I would have been happy paying any more than that, no matter how much I wanted clean teeth.  This was a missed revenue opportunity for the hotel, money left on the table for what would seem a pretty common request from other guests as forgetful as me. Hotels like to make money wherever they can right? It didn’t seem like it that night.

Will money be left on the table with World Cup accommodation next year? There’s a decent storm brewing over room rates in September/October 2011 with many fearing over-inflated room rates will dent New Zealand’s reputation and will make tourists feel as though they have had their wallets emptied at gunpoint.

Some of this talk is fair but most of it is overly black and white. You can’t speak of September/October 2011 as though it is one homogenous set of dates with the same level of supply and demand; there is a huge variety of likely occupancy levels even from one day to the next in the same city.  A game day means town will be full and prices are likely to be high but the following days might see a “normal” or even below average occupancy as fans and teams leave town for the next venue.

Should an accommodation business faced with those dynamics be forced to keep game day rates low just to artificially uphold New Zealand’s reputation, or should they be allowed to let demand determine their rooms rates to a fair degree?

Recent controversy over a Christchurch hotel charging $2,400 for a single room night has put a spotlight on the issue, but instances like this are likely to be few and far between, at least to that extreme.

What is it about the World Cup that gets NZ so worked up over price? Hotel rooms in Auckland on the nights of the recent U2 concert were going at well over $1000 but nobody seemed to mind. Even Wellington on Bon Jovi night last week saw people paying in excess of $500 for a room. Those guests probably didn’t want to pay that much, but hey, town is full and so prices are high. It’s a reality that in most situations people find acceptable.

But not the World Cup. Is it because rugby is so dear to our hearts as a nation? Is it an almost socialist sense of fairness that everyone should have access to low-price accommodation during the World Cup because it is our ‘national game’?

Whatever the case it is clear the industry has a clear division between those who want to make a bit more money per night and keep themselves as full as they can over a long period (ie not just game days) and those who want to ensure they squeeze every last dollar out of every available room.

Just last week we had a Travelbug booking cancelled by the motellier that hadn’t realised the rates he was selling for in September next year. Rather than take the hit, he emailed the UK traveller that he couldn’t sell his room for such a “ridiculously low” rate. But the motellier just down the road was willing to re-accommodate the same guest at an only slightly higher rate than he was selling at this year because he doesn’t see the point in ratcheting rates too high on non-game days.

So how will it wash up next year? No toothpaste on offer, toothpaste at $10 or toothpaste at $50? Only time will tell but if you believe the hype then the world is watching….

2 Comments

  1. Gen December 14, 2010 at 10:11 am #

    Nice article. So true how it’s the little opportunities that are often missed.

    I’m always amazed by Ryan air (although not a great example) who makes 25% of the revenue from things other than flights. They take every opportunity to try and sell you something extra.

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