When Will Enough Really Be Enough?

The price of gas, as everyone well knows, is ridiculous. In Malibu, Calif., I recently paid a whopping $3.89 a gallon for regular unleaded. According to some reports, it's at its highest levels since the 1981 gas crisis, when the government unsuccessfully tried to regulate it, leading to long lines and empty pumps.

Hotel room rates have also shot up recently, with increased occupancy driving the trend in a number of cities.

Does anyone else notice that there always seem to be a gas crisis in some shape or form right around a holiday or the busy summer travel time? Kind of like the way room rates shoot up when people are traveling a lot, or when a big tradeshow comes to town.

Hotels undoubtedly study the market carefully before fixing their rack and peak rates. But lately rack rates have gotten so high that even tradeshow attendees with expense accounts are starting to take notice.

The bottom line is, especially in cities where tradeshows have a huge economic impact, if something isn't done soon to stop the upward trajectory of hotel rates, tradeshows might just skip these towns altogether.

They could just head on over to a nice, smaller city, say, Louisville, Ky., which has relatively low overall costs for hotels, gas and flights (and no labor unions, by the way). I'm sure the Bluegrass State would love to have more shows.

Some of the responsibility rests with convention bureaus. They have the task of drawing business to their cities, in particular the hotels they are often funded by, so couldn't someone at the bureau speak up and say, "Hey everybody, aren't we shooting ourselves in the foot by charging these high prices?"

According to Smith Travel Research's first-quarter report for 2007, the occupancy rate in Seattle, Wash., rose from 60.3 percent in the first quarter of 2006 to 63.7 percent in the same period this year, and the average daily rate jumped from $102.83 to $113.29. New York City saw a smaller occupancy increase in the same period, but the price of hotel rooms leaped from $200.89 to $221.57.

Jan Frietag, vice president of Smith Travel Research, explained the hotel rate hikes: "We are in the second part of a post-Sept. 11 recovery cycle. Occupancy has bounced back drastically by now, but there haven't been that many new hotels built. When occupancy is high, rates go up, but there's also new supply coming in. In specific markets, rate increases will change as there is more competition."

Frietag warned that cities with rising hotel costs will at some point see them driven back down, as competition increases in the marketplace. But by then, all those coveted tradeshow customers who got sick of getting squeezed could have taken their business to another town where they felt more appreciated.

Now, about those gas prices ...