With the influx of visitors in town for the tournament, hotel prices have jumped up substantially. Rooms across the city are priced about double their normal rates for this time of year, and those near the University of Phoenix stadium in Glendale are going for more than four times the standard rate. When I was reading about these increases, many internet commenters were furious over perceived "price gouging." We usually only hear that term when prices increase during natural disasters, but it has also come up in recent months with disputes over Uber's price increases on New Year's Eve or during the violence in New York City last fall.
But businesses taking advantage of increased demand are not "gouging" customers; they are, yes, trying to maximize profit, but more importantly, they are signaling the potential for decreasing supply. And this signal is important for other potential suppliers. When prices increase, it's a flashing sign that there is money to be made, which, in turn, entices other providers to join in and seek financial gain. But more importantly, when others emerge to snag some of those dollars, they provide rooms that would have long been sold out had the prices from the existing hotels never increased. After all, four buddies on a basketball-watching road trip might have bought four individual rooms at the cheaper rater. But the higher price helps them change their mind to sharing just one room, which opens up more rooms for other guests. Lower prices would have meant thousands of people coming to town with nowhere to stay. Raising prices forces people who truly want/need a place to stay to buy, while others need to make other arrangements that may be fulfilled by alternative lodging. This leads to more Airbnb and other private vacation rental offerings that wouldn't exist without the increasing prices, which then stabilize the pricing signal.
High prices induce competition, which then eases the prices back down--sometimes not as much as we would like, but that's always going to be the case no matter the price. So don't get upset when prices go up; that's just the market telling you that supplies are running low and you'll need to decide whether the product or service you want is really worth the higher price. And it's also telling everyone else that others may want to get in on the money-making opportunity to satisfy your desires. You may feel "gouged," but paying for a comfortable hotel room sure beats sleeping in your car. And next time you want to attend a major event, don't blame those who are trying to serve you. Without their goal to make money, they wouldn't exist to help you in the first place.