Pearson New International Edition International pcl tp indd 1

MODERN FRONT OFFICE ISSUES AND TACTICS
The Sky Is Not the Limit!
What is a hotel room worth when demand for it absolutely explodes? If your answer is
“the sky is the limit,” then you may have a public relations problem and a legal problem!
In most states, predatory pricing is illegal, and hoteliers publicly accused of it will clearly
face negative publicity and potential legal action as well.
Government officials responsible for monitoring illegal pricing tactics rightly become
vigilant during times of natural disasters and other emergencies. To understand why, con-
sider the demand for hotel rooms that resulted from the 2005 hurricanes Katrina and Rita.
These storms decimated hotels on the U.S. Gulf Coast, causing a decline in the number of
rooms available to sell while at the same time driving demand for the remaining hotel
rooms through the roof. Many in the hotel industry responded by housing refugees for lit-
tle or no charge, but very few hoteliers responded to the extraordinary demand by raising
rates to two or three times their normal rack rate. For these hotels, the inevitable result was
the attention of local law enforcement officials.
Most states have antigouging laws that restrict the prices hoteliers can charge in emer-
gency situations. For example, Oklahoma’s price-gouging law stipulates that prices cannot
jump more than 10 percent above the price normally charged, unless the spike is caused by
nonemergency factors and does not result in an increase in profit. State laws vary, so all
front office managers should know about their state’s laws that regulate allowable room
rates during times of emergencies.