This type of shabby story seems to be a regular favourite amongst journalism hacks. The same story can be dragged out every now and again by merely changing the date, the accommodation provider's name and including the latest outraged and bewildered punter that believes that goods and services should be evenly distributed according to need.
Maybe we shouldn't be too hard on journalists that churn out these stories, as they are merely appealing to Kiwi's mistrust of market forces and entrenched totalitarianism.
So back to the front page story that howled that the modest Bond Street Motor Lodge in Kingsland had allegedly raised their nightly tariff by up to 1000 per cent over the Rugby World Cup period. Other accommodation providers in the area were reported to be raising tariff below 300 per cent.
So are we able to remotely critique with certainty the value of the strategically located Bond Street Lodge's offer of a single room with shared bathroom and kitchen facilities for alleged $350 a night?
Apparently we can! The Herald reporter managed to obtain a soundbite from Motel Association chief executive Michael Baines that said: "$350 for a room without a bathroom was clearly unreasonable, but didn't reflect accommodation rates during the cup."
An historical quote from chief executive of tournament organisers Rugby New Zealand 2011, Martin Snedden was dragged-out for effect: "Irresponsible profiteering within any aspect of hosting the event as a nation and we'll suffer badly."
A musician, Joe Walsh played the role of an outraged consumer that generously indicated willingness to pay only $70 per night for a room over the peak Rugby World Cup period.
In order for the successful operation of an accommodation business it is necessary for providers to manage yield. It is often misunderstood that the nature of selling room-nights is that an accommodation business is offering a fixed inventory of rooms that are highly perishable "goods." Room-nights are unable to be stored, if unsold at a specific point in time.
These goods are marketed to a variety of customer groups with different purchasing behaviour. They are typically sold at different tariffs under different booking conditions to different market segments, through a variety of distribution channels to cope with demand swings and market trends.
Put simply, tariff can change according to market demand - get over it!
While some accommodation providers may initially set tariff somewhat wide of the mark over peak demand periods, the market should and does dictate tariff levels.
It was reported that the Bond St Motor Lodge allocated 10 of its 60 rooms with a tariff that was deemed appropriate for the Rugby World Cup period. Appropriately, the last word should go to the consumer that to date have booked 9 of those 10 allocated rooms. In an open market they have willingly accepted the value offered.
We reckon that the Bond St Motor Lodge that is a venue five minutes walk from a world-class event have probably set their tariff over the Rugby World Cup about right.
