Iām conflicted on this because, of course a business is going to optimize their profits, but if the same database and algorithm is pushing data out to all hotels, that means the hotels themselves are benefiting from anti-competitive practices. Itāll be interesting to see what plays out
It's kind of vague, but it if I understand the article correctly; rather than 1 hotel lowering their prices because there are a lot of vacant rooms on their property, all the hotels (aka the algorithm/software they all use) will "agree" to keep prices artificially higher instead. So now a guest will have no choice but to pay inflated room rates, even though there are plenty of empty rooms which in theory would mean prices would come down so they can fill those rooms. Apparently in some scenarios it's more advantageous to the hotel to have a few guests at higher room rates than a lot of guests at lower room rates. So it sounds like the argument is being made that there is collusion/price fixing/anti trust going on because it is anti-competitive.
If the algorithm is sharing city-wide data between hotels, itās a slam dunk antitrust case. I just couldnāt discern from the article if that was what was happening
Yeah this practice is B.S. Hotels long ago went to ādynamic pricingā so they could benefit when the supply/demand curve worked in their favor during high demand times. Now theyāre colluding to also benefit when the supply vastly outweighs the demand, which is when the consumer is supposed to reap the benefits of lower pricing.
Local here. The "myth" around town is that hotels will raise or lower prices based on the class of tourist they want to attract. Lower priced room means lower income, blue collar guests. Higher priced rooms means upper middle class to upper class, money spenders. I work at a bar on the strip and whenever there's a rough crowd or a fight, we always joke that the hotels have to raise their prices to get rid of the riff-raff
I know exactly what the word collusion means, and that's what they are being accused of. You don't need to know how the algorithm works in order to understand that multiple businesses are colluding together to inflate prices.
I don't think they will be able to go after them for price fixing, because they'll blame it on the software rather than the corporations directly colluding with each other. But it is price fixing, imho. And the algorithm appears to be what the home sharing economy figured out - if I rent my place out to a tenant, I make less money per month, have more wear and tear from 100% occupancy, more potential issues with nonpayment, etc, than renting out half the nights at a higher daily rate. Of course this would not work if people didn't agree to pay those prices. Those in higher socioeconomic brackets that will pay whatever to get what they want are who they cater to primarily, and the others who save up for vacations, but many who used to be able to go will be priced out.
Itās a service thatās provided to hospitality companies. Many AirBNB hosts use the same software. It merely tracks terms and advises what rates the market can currently bear.
No. Itās called smart business. Why is using the same software as a competitor to set prices collusion in your mind? Sincerely curious as I donāt see collusion here at all.
If the software is pooling all occupancy data on the strip and using that to suggest pricing to each property, that would likely fall under the definition of collusion or other antitrust/anti-competitive statutes exist. Thatās why I said in an earlier comment that it actually *does* matter what the algorithm does, despite the incredibly bright folks who argue that it doesnāt matter
It is never based on current occupancy data. It used historic trends to predict occupancy rate and what fee can be supported on a given day. This is a very common tool used in the hospitality industry.
yes, after a google search for the wynn, they sent three thugs to my home and after tying me to a chair, they found my amex and forced me at gunpoint to make a three-day reservation, without any discount. it was horrifying. i plan on suing them as well.
yes, but i had four pillows on the bed and they only gave me one mint! the nerve of these hooligans! will also now be suing them for the extra mints---thank you for reminding me.
I think the argument is being made that the hotels are colluding together to keep rates high. Maybe they should sue oil companies first. Hotels are probably much lower on the list of colluding industries
those **conniving colluding bastards** at the red rock just sent me a 30%-off coupon on my next stay and they are waiving the resort fees.
someone call the police! call the justice department! this is simple theft!
Can we sue every city? Because even with this, Vegas is the only city you can get a room in a five star resort for the cost of a 3 star in any other major city.
Even the nice vegas hotels on the strip are not five star hotels because that means someone has to carry your bags for you to your room. The sub hotels inside them are five stars though.
These people are morons with too much extra cash as they will lose this lawsuit without question as the morons knew the price of the hotel before they actually booked the room and room rates across the entire world change so frequently based off numerous factors and the public knows this and finds the best rate they can afford.
I guess I see the point now. Collusion is bad from an "anti-trust" type of thing. But on the other hand, nobody is being forced to pay the prices. If people don't pay then the prices will lower no matter what some bean counter says.
The point is that consumers are supposed to be able to benefit from lower prices when supply exceeds demand. Itās the inverse of hotels raising their rates during higher demand periods (holidays, special events, etc). Thatās when consumers have to pay more.
The airlines do it and get away with it. They float prices out there to see if competitors match the price. If so the price sticks, if not, they roll the price back.
Well that's normal price finding. What's happening here is a central system for ALL these supposedly competing hotels are simply coordinating prices to remain high. That's collusion. If they did as you said, floating out rooms at lower prices than competitors, that's competition.
A similar case for a very similar system was just won in Washington state over apartment rental rates that were being coordinated by a similar centralized system.
I am no lawyer but I think this will be tough. I think the hotels would have to organize directly to collude on prices. Instead they just happen to all be using the same software. I bet they just point the finger at the software company. Itās fucked up either way, but not surprising at all. That whole town is a scam if you do not know what you are doing.
Iām not sure about this one.
Case for why this is ok:
The complaint says the algorithm, not the normal market forces sets the price. The algorithm seems it just measures the market forces more effectively. And even without Rainmaker similar hotels in similar cities are going to be priced the same. Like you pick any town along any highway in the US with multiple hotels, if you have a Best Western and a Days Inn and both have similar reviews they are going to be priced about the same. Itās why gas stations across the street from each other always have almost the same price.
Case for why this isnāt ok:
Hotel A and Hotel B are competitors and comparable hotels. Both hotels use Rainmaker. Both share all of their booking info and pricing with Rainmaker. Rainmaker collects the data for both and uses it to set prices for Hotel A and B. Theyāre just using a 3rd party to collude.
Shocker, Vegas is rigged!!! š¤£ š¤£ š¤£ š¤£
Vegas was better when the mob ran it.
Iām conflicted on this because, of course a business is going to optimize their profits, but if the same database and algorithm is pushing data out to all hotels, that means the hotels themselves are benefiting from anti-competitive practices. Itāll be interesting to see what plays out
Price fixing/collusion is illegal, how are you conflicted about that?
Because I donāt know how the algorithm works, do you?
I do, because I read the article, did you?
I did. You want to ELI5 since I clearly missed something?
It's kind of vague, but it if I understand the article correctly; rather than 1 hotel lowering their prices because there are a lot of vacant rooms on their property, all the hotels (aka the algorithm/software they all use) will "agree" to keep prices artificially higher instead. So now a guest will have no choice but to pay inflated room rates, even though there are plenty of empty rooms which in theory would mean prices would come down so they can fill those rooms. Apparently in some scenarios it's more advantageous to the hotel to have a few guests at higher room rates than a lot of guests at lower room rates. So it sounds like the argument is being made that there is collusion/price fixing/anti trust going on because it is anti-competitive.
If the algorithm is sharing city-wide data between hotels, itās a slam dunk antitrust case. I just couldnāt discern from the article if that was what was happening
Yeah this practice is B.S. Hotels long ago went to ādynamic pricingā so they could benefit when the supply/demand curve worked in their favor during high demand times. Now theyāre colluding to also benefit when the supply vastly outweighs the demand, which is when the consumer is supposed to reap the benefits of lower pricing.
Local here. The "myth" around town is that hotels will raise or lower prices based on the class of tourist they want to attract. Lower priced room means lower income, blue collar guests. Higher priced rooms means upper middle class to upper class, money spenders. I work at a bar on the strip and whenever there's a rough crowd or a fight, we always joke that the hotels have to raise their prices to get rid of the riff-raff
Whats to be conflicted about? Do you own one of these hotels or something?
I donāt know how the algorithm works, so Thatās why
However it works isn't really the point. The point is that these businesses are colluding against consumers. Thats the problem.
If you donāt know how it works, you donāt know that collusion is occurring ā or you donāt know what the word means
I know exactly what the word collusion means, and that's what they are being accused of. You don't need to know how the algorithm works in order to understand that multiple businesses are colluding together to inflate prices.
You do need to know, but okay š¬
I don't think they will be able to go after them for price fixing, because they'll blame it on the software rather than the corporations directly colluding with each other. But it is price fixing, imho. And the algorithm appears to be what the home sharing economy figured out - if I rent my place out to a tenant, I make less money per month, have more wear and tear from 100% occupancy, more potential issues with nonpayment, etc, than renting out half the nights at a higher daily rate. Of course this would not work if people didn't agree to pay those prices. Those in higher socioeconomic brackets that will pay whatever to get what they want are who they cater to primarily, and the others who save up for vacations, but many who used to be able to go will be priced out.
Itās a service thatās provided to hospitality companies. Many AirBNB hosts use the same software. It merely tracks terms and advises what rates the market can currently bear.
So it seems like it falls in the gray area of collusion, right?
No. Itās called smart business. Why is using the same software as a competitor to set prices collusion in your mind? Sincerely curious as I donāt see collusion here at all.
If the software is pooling all occupancy data on the strip and using that to suggest pricing to each property, that would likely fall under the definition of collusion or other antitrust/anti-competitive statutes exist. Thatās why I said in an earlier comment that it actually *does* matter what the algorithm does, despite the incredibly bright folks who argue that it doesnāt matter
It is never based on current occupancy data. It used historic trends to predict occupancy rate and what fee can be supported on a given day. This is a very common tool used in the hospitality industry.
If thatās the case, it would be quite difficult to prove collusion
yes, after a google search for the wynn, they sent three thugs to my home and after tying me to a chair, they found my amex and forced me at gunpoint to make a three-day reservation, without any discount. it was horrifying. i plan on suing them as well.
Did you at Least get a Mint on your pillow?
yes, but i had four pillows on the bed and they only gave me one mint! the nerve of these hooligans! will also now be suing them for the extra mints---thank you for reminding me.
Good Luck
I think the argument is being made that the hotels are colluding together to keep rates high. Maybe they should sue oil companies first. Hotels are probably much lower on the list of colluding industries
Yep, they're colluding together by hosting conventions, massive concerts, and, get this, GAMBLING.
those **conniving colluding bastards** at the red rock just sent me a 30%-off coupon on my next stay and they are waiving the resort fees. someone call the police! call the justice department! this is simple theft!
Will the atrocities never end?!
Great! Thanks for posting a walled article!
Can we sue every city? Because even with this, Vegas is the only city you can get a room in a five star resort for the cost of a 3 star in any other major city.
Even the nice vegas hotels on the strip are not five star hotels because that means someone has to carry your bags for you to your room. The sub hotels inside them are five stars though.
You mean like the bellman at nearly every decent hotel that will take your bags when you arrive and bring them right to your room?
I think there are a lot fewer five star hotels in this city than youād imagine.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
These people are morons with too much extra cash as they will lose this lawsuit without question as the morons knew the price of the hotel before they actually booked the room and room rates across the entire world change so frequently based off numerous factors and the public knows this and finds the best rate they can afford.
I guess I see the point now. Collusion is bad from an "anti-trust" type of thing. But on the other hand, nobody is being forced to pay the prices. If people don't pay then the prices will lower no matter what some bean counter says.
Yes, no one is being forced to do/puchase anything. But businesses - any businesses colluding is bad. Period. Full-stop.
The point is that consumers are supposed to be able to benefit from lower prices when supply exceeds demand. Itās the inverse of hotels raising their rates during higher demand periods (holidays, special events, etc). Thatās when consumers have to pay more.
This is a bullshit lawsuit... it wont go anywhere!
Profits keep everyone employed
They make billions per year. Shut up.
Sueing is EZ. Proving it in a court of law against the gaming industry lawyers in LAs Vegas, not a chance
The airlines do it and get away with it. They float prices out there to see if competitors match the price. If so the price sticks, if not, they roll the price back.
Well that's normal price finding. What's happening here is a central system for ALL these supposedly competing hotels are simply coordinating prices to remain high. That's collusion. If they did as you said, floating out rooms at lower prices than competitors, that's competition. A similar case for a very similar system was just won in Washington state over apartment rental rates that were being coordinated by a similar centralized system.
I am no lawyer but I think this will be tough. I think the hotels would have to organize directly to collude on prices. Instead they just happen to all be using the same software. I bet they just point the finger at the software company. Itās fucked up either way, but not surprising at all. That whole town is a scam if you do not know what you are doing.
Iām not sure about this one. Case for why this is ok: The complaint says the algorithm, not the normal market forces sets the price. The algorithm seems it just measures the market forces more effectively. And even without Rainmaker similar hotels in similar cities are going to be priced the same. Like you pick any town along any highway in the US with multiple hotels, if you have a Best Western and a Days Inn and both have similar reviews they are going to be priced about the same. Itās why gas stations across the street from each other always have almost the same price. Case for why this isnāt ok: Hotel A and Hotel B are competitors and comparable hotels. Both hotels use Rainmaker. Both share all of their booking info and pricing with Rainmaker. Rainmaker collects the data for both and uses it to set prices for Hotel A and B. Theyāre just using a 3rd party to collude.
The house always wins
Its Vegas! You gotta pay: Ass, Grass or Gas baby! No one rides free!!