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Companies Criticized for Price Gouging

As Texans are desperate for housing and food in the aftermath of Hurricane Harvey, some companies are taking advantage. People reported hundreds of examples of price gouging for items like bottled water, groceries, gas, and hotel rooms. Temp

A Best Buy near Houston was selling a case of water for $42; others reported prices up to $99. Price gouging is illegal after natural disasters, as the Texas attorney general's site explains.

Best Buy issued a statement that this was the act of one store.Temp

A Best Western in Robstown was also over-charging: $321.89 a night compared to its usual price of $119. In addition to raising the room rate, the hotel added extra fees. The PR manager for Best Western's corporate office issued this statement:

“Best Western was founded on the principles of honesty, integrity, compassion, and service. We are deeply offended and saddened by the actions taken by this hotel. As a result, we are immediately severing any affiliation with the hotel. This hotel’s actions are contrary to the values of Best Western. We do not tolerate this type of egregious and unethical behavior.”

The hotel has been removed from Best Western's website.

Image source.

Discussion:

  • What's your view of raising prices during disasters? How is this different from revenue management?
  • Analyze Best Buy's statement. How well does this meet audience needs and communication objectives?
  • Did Best Western do the right thing in severing the hotel from the company? What will be the consequences of this action?