Dallas local news station WFAA reported that at one point, Hotel.com searches for rooms in the Dallas-Fort Worth area showed Super 8 nightly rates at $400 and Days Inn at $900. On Twitter, screenshots of Ramada by Wyndham in South Austin nightly rates, from $500 to $999, went viral.
Other states are dealing with the issue, as well. In response to reports of unusual increases in lodging rates in Oregon, Gov. Kate Brown issued an executive order to declare an abnormal market disruption due to the severe winter weather emergency in nine Oregon counties.
Are the unusual increases in room rates a sign that hotels are price-gouging customers desperate for shelter, or are they products of pricing software glitches, as some Twitter commenters have claimed?
Hotel consultant and author Larry Mogelonsky said the answer isn’t straightforward.
“While these high snowstorm rates may appear as either blatant price gouging or an automated software error, the real reason is not so simple, with several mitigating factors involved,” Mogelonsky said in an email.
According to Bruce Rosenberg, HotelPlanner’s president of the Americas and chief operating officer, sharp increases in room rates are common during crises, same as for other essentials such as emergency airfare, gas and, as of the pandemic, hand sanitizer. When hurricane season hits and more people need rooms, hotel prices go up.
“It happens every storm,” Rosenberg said. “Prices are going to go up. It’s a question of reasonableness of the price increases.”
But just because a hotel raises its rates doesn’t mean it’s price gouging. The Texas Office of the Attorney General said high prices don’t always translate to price gouging as businesses are free to set their own prices for their goods.
“However, if a disaster has been declared by the Governor of Texas and businesses raise the price of their products to exorbitant or excessive rates to take advantage of the disaster declaration, then it is quite likely that price gouging is taking place, and a complaint should be filed with our office concerning the incident,” the attorney general’s office said in a statement to KVUE.
Rosenberg and Mogelonsky said it’s normal for a hotel rate to go up in cases of high demand, but the Ramada by Wyndham in South Austin skyrocketing to $999 is not normal.
The hotel says its now-viral rates were not intentional. A spokesperson for Wyndham Hotels & Resorts told The Washington Post in a statement that the brand does not tolerate price gouging and that its hotels comply with all local, state and federal laws.
“In speaking with the owner of this hotel, which is independently owned and operated as a franchise, it’s our understanding that the temporary rate increases seen online were the result of the property working to close out its inventory as it managed the loss of power and other utilities,” the statement said.
Furthermore, Wyndham Hotels & Resorts said no guests were charged the spiked rates.
In an interview with KXAN, a local news station in Austin, Jay Mazur, a spokesperson for the franchise operator, said the rate in question was posted when the property lost power around 2 a.m.
“Because the hotel didn’t have power, they were not able to go in and close out the rate system and block availability,” Mazur said. “So, an employee at another property who had multi-property access went in and manually raised it to the highest value in order to deter people from booking the hotel, which is a frequent practice among hotels during high occupancy times, but not during a pandemic, and this employee shouldn’t have done that.”
Once the employee error was discovered by management, it was fixed, Mazur said.
Should Ramada by Wyndham in South Austin have raised the rates on purpose, its operators could have faced a civil penalty of $10,000 per violation, KXAN reported. If the price-gouged consumer was elderly, that penalty could have been as high as $250,000, according to the Attorney General’s Office.
For those who believe a hotel or other business is price-gouging customers, officials said to file a complaint with the state’s attorney general’s office or call their regional consumer protection hotline.
Rosenberg also recommended taking a screenshot of the offending rate and holding the business accountable on social media, or sending it to the brand’s customer service department.
“People at the corporate level who run the reservations, they will watch for this stuff,” he said.
Additionally, Rosenberg recommended paying for a room in advance to lock in your rate and reservation.