Well, nothing ! I remember every time the local train system conked for some reason the taxi drivers used to drive up their fares. The meter was forgotten. So a Churchgate to Bandra ride which was, lets say, Rs 300 by the meter, suddenly became Rs 600. Stranded passengers wanting to reach home obviously had little choice.

I think of the Mumbai black and yellow taxi cabs when I check into hotels these days, particularly the leading hotel chains in India. As I am right now in Delhi at a `prominent' address. The hotel is nice, as it always has been. Except that the tariffs have been jacked up beyond comprehension. Worse, they are mostly quoted in dollars. Its like the rupee had gone out of fashion. Or the dollar figures make the tariff seem smaller. Incidentally, I recommend you carry smelling salts in case you feel dizzy at the check-in counter. And while checking out.

I have no specific problem with the hoteliers. Since they are in this business to make profit. Except that they switfness with which they've raised rates, almost unapologetically, makes me feel they are behaving like Mumbai's taxi drivers. Yes, yes I know there is no fixed or regulated tariff for hotels.

But It's The Same Product !

But its the same product. The rooms are the same, the linen is identical, the telephones don't work some times, housekeeping often forgets to bring what you asked for and the food, well, is the same. Service, let me tell you, is not top of the line. The difference is you know the customer will return. Where will the guy go ? And yet, you are paying twice as what you did six months ago.

Makes me think this is a good time to buy hotel stocks, since I might benefit from their success if not their product. And yet, I don't find the hotel stocks exactly soaring. I wonder why.

16 Comments

Shreyash Gupta said…
Hi Govind,
You are right but then try checking this against any business that operates on a constant capacity and you will find this to be true.
Check the airlines market. All flights become at least twice as expensive during Christmas. And its note even the same service during those peak seasons. if the hotel gives you the same service - guess you are lucky!!!
Sasha Gusain said…
It's a business and yes no business comes with fixed rates. Cabs have a tangible benefit. A hotel on the other hand is somehow mysteriously benefiting you through the ambience they are still footing the costs for (through the tariff on your bill) or the graduates they recruited from some institutes who for some profound reason think that if you order a unique cuisine you should be educated about it's nuances.

But we still go to these hotels, pay a bomb to be pampered, etc, etc..

Because their strategy remains the same - everything luxurious should come at an unpredictable cost that can not be questioned.
Ajitkumar Wagle said…
This is a universal phenomena governed by the rule "Demand and Supply"
Then why we should expect that the Mumbai Taxi Drivers and Hotels to be different?
Anonymous said…
You wanted to know why hotel stocks are not soaring. 1) They are already valued highly. 2) The entry barriers are not so high. Even some homeowners seem to be converting to guest house owners.
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