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Algorithmic Pricing is Price Gouging $31,000 fine to Hotel

30 points by nacho-daddy 6y ago

nacho-daddy 6y ago
Hotellier claims price gouging was not intentional, but algorithmically driven by occupancy during the wildfire emergency.
throwaway888abc 6y ago
That could have big implication on hospitality sector / airlines. All the pricing and profits are literally driven by this.
- goatcode 6y ago
  Could it apply to online retailers like Amazon, too?
- alisonkisk 6y ago
  No, it won't, and, no, they aren't. This is a price gouging case, not an algorithmic pricing case. There's nothing new here, except that some companies run software that recommends illegal prices. Oregon only allows 15% surcharge during emergencies. https://www.doj.state.or.us/consumer-protection/sales-scams-fraud/price-gouging/ https://www.doj.state.or.us/consumer-protection/sales-scams-...
- MeinBlutIstBlau 6y ago
  The issue here is the software wasn't aware of the fires. It was just thinking "oh were packed? Better increase the price! The average manager has no control over that. They can manually override each charge if they wanted to, but then they get chewed out for doing something humane that their psycho owner may not have. This is the best solution to the problem. Punish the people at the top. You bet that will trickle down real quick.
sjg007 6y ago
Hotels and motels are actually not supposed to charge different rates for different people, only based on room type. Why? Racism. In the past they would refuse to rent a room to people of color, and then later say OK but at a huge price increase. For this reason jurisdictions have min and max room rate hotel laws for a reason. Check the max price on back of the room door when you check in. Show that to the manager, if they refuse to honor it, well the lawsuit will be welcome. The airline thing is interesting because they sometimes show different prices depending on the browser you use on what device. That sounds like a major lawsuit waiting to happen.
- alasdair_ 6y ago
  I've checked those posters before and I usually see a max rate of $1,200 or so for a $200 room.
- Rebelgecko 6y ago
  Whenever I've checked the max rate for a room it's been ridiculously high. High enough that the hotel could charge me 3x the AAA/AARP/Other group price and I'd still be well under it
mikestew 6y ago
“The computer sets the algorithm and as hotel business increases, the rates increase. I have nothing to do with that,” he said at the time. Blaming it on "the computer" is so 70s. That and, as another commenter points out, one best hope that none of those customers are a minority as the "the computers ate my baby!" excuse might not sit so well with a judge.
- mhh__ 6y ago
  See also the fuckup with the exams in the UK last year "It was the computer, honest, the algorithm blah blah blah"
URSpider94 6y ago
Hotels fall into a class of businesses that are considered a public good, much like taxi companies. As such, there are often really strict regulations on what hotels can charge customers. Some of it is to prevent racist practices, but some of it is to prevent straight-up profiteering in emergency situations. As others have noted, most states require that hotels post their maximum rates on cards inside the room for this very reason. I’m not sure, but I expect that the hotel’s business tax may be based on those maximum room rates. There must be some incentive not to just make those max rates “one meeeeelion dollars”. The unwritten rule is that we expect hotels to be there in times of crisis to house the population. There are also a ton of regulations around things like keeping an up-to-date guest register, providing a phone in every room, and providing a hotel safe. This is part of the reason that hoteliers get so upset at Airbnb - they aren’t subject to any of the regulations that hotels are, which helps them undercut their pricing, and which also leaves their patrons open to abuse.
- perl4ever 6y ago
  >Hotels fall into a class of businesses that are considered a public good This doesn't seem to be the term "public good" as used in economics, so what do you mean by it?
  - URSpider94 6y ago
    You’re right, that’s probably not the right term. What I mean is that hotels are considered a quasi public utility, in the same way as taxi services - private businesses that are essential to proper functioning of a community and as such are heavily regulated. And in part for this exact reason - when there are emergencies, we expect them to be available for people to use as temporary housing without being charged “surge pricing” - and that’s written into the law in most states.

30 points by nacho-daddy 6y ago

Hotellier claims price gouging was not intentional, but algorithmically driven by occupancy during the wildfire emergency.

throwaway888abc 6y ago

That could have big implication on hospitality sector / airlines. All the pricing and profits are literally driven by this.

goatcode 6y ago
Could it apply to online retailers like Amazon, too?
alisonkisk 6y ago
No, it won't, and, no, they aren't. This is a price gouging case, not an algorithmic pricing case. There's nothing new here, except that some companies run software that recommends illegal prices. Oregon only allows 15% surcharge during emergencies. https://www.doj.state.or.us/consumer-protection/sales-scams-fraud/price-gouging/ https://www.doj.state.or.us/consumer-protection/sales-scams-...
MeinBlutIstBlau 6y ago
The issue here is the software wasn't aware of the fires. It was just thinking "oh were packed? Better increase the price! The average manager has no control over that. They can manually override each charge if they wanted to, but then they get chewed out for doing something humane that their psycho owner may not have. This is the best solution to the problem. Punish the people at the top. You bet that will trickle down real quick.

sjg007 6y ago

Hotels and motels are actually not supposed to charge different rates for different people, only based on room type. Why? Racism. In the past they would refuse to rent a room to people of color, and then later say OK but at a huge price increase. For this reason jurisdictions have min and max room rate hotel laws for a reason. Check the max price on back of the room door when you check in. Show that to the manager, if they refuse to honor it, well the lawsuit will be welcome. The airline thing is interesting because they sometimes show different prices depending on the browser you use on what device. That sounds like a major lawsuit waiting to happen.

alasdair_ 6y ago
I've checked those posters before and I usually see a max rate of $1,200 or so for a $200 room.
Rebelgecko 6y ago
Whenever I've checked the max rate for a room it's been ridiculously high. High enough that the hotel could charge me 3x the AAA/AARP/Other group price and I'd still be well under it

mikestew 6y ago

“The computer sets the algorithm and as hotel business increases, the rates increase. I have nothing to do with that,” he said at the time. Blaming it on "the computer" is so 70s. That and, as another commenter points out, one best hope that none of those customers are a minority as the "the computers ate my baby!" excuse might not sit so well with a judge.

mhh__ 6y ago
See also the fuckup with the exams in the UK last year "It was the computer, honest, the algorithm blah blah blah"

URSpider94 6y ago

Hotels fall into a class of businesses that are considered a public good, much like taxi companies. As such, there are often really strict regulations on what hotels can charge customers. Some of it is to prevent racist practices, but some of it is to prevent straight-up profiteering in emergency situations. As others have noted, most states require that hotels post their maximum rates on cards inside the room for this very reason. I’m not sure, but I expect that the hotel’s business tax may be based on those maximum room rates. There must be some incentive not to just make those max rates “one meeeeelion dollars”. The unwritten rule is that we expect hotels to be there in times of crisis to house the population. There are also a ton of regulations around things like keeping an up-to-date guest register, providing a phone in every room, and providing a hotel safe. This is part of the reason that hoteliers get so upset at Airbnb - they aren’t subject to any of the regulations that hotels are, which helps them undercut their pricing, and which also leaves their patrons open to abuse.

perl4ever 6y ago
>Hotels fall into a class of businesses that are considered a public good This doesn't seem to be the term "public good" as used in economics, so what do you mean by it?
- URSpider94 6y ago
  You’re right, that’s probably not the right term. What I mean is that hotels are considered a quasi public utility, in the same way as taxi services - private businesses that are essential to proper functioning of a community and as such are heavily regulated. And in part for this exact reason - when there are emergencies, we expect them to be available for people to use as temporary housing without being charged “surge pricing” - and that’s written into the law in most states.