Whenever you take a trip, you’re subjected to dynamic pricing (whereby the cost of a product or service varies based on supply, demand, willingness to pay, etc.). This applies to flights, hotel rooms, rental cars, concerts, and more.
However, here’s a type of dynamic pricing I’ve not yet seen in the travel industry. I see a lot of criticism of this online, though I’m not sure I necessarily see the issue… let me explain.
In this post:
Las Vegas hotels adopt dynamic pricing in surprising way
The Las Vegas Review-Journal has done an interesting analysis of a practice that seems to be widely used by gift shops and sundry stores inside hotels on the Las Vegas Strip. We’re talking about shops inside hotel lobbies where you can buy everything from drinks, to snacks, to sunscreen.
Generally speaking, you wouldn’t expect that the price within any store would vary based on the time of day or day of week that you’re shopping, but that very much seems to be the case. The outlet sent someone to the stores inside several Las Vegas casino hotels at five different times throughout the week, to compare the price of three items — sunscreen, energy drinks, and bottled water.
While some outlets had consistent pricing, others didn’t. We’re not talking about massive differences in pricing, but still, the variations are clearly intentional. For example:
- The sundry store inside Mandalay Bay reportedly charges $42 for sunscreen on a Friday afternoon, while it charges $36 on a Saturday evening
- The sundry store inside the Bellagio reportedly charges $5.79 for a bottle of water on a Tuesday afternoon, while it charges $6.79 on a Friday morning
- The sundry store inside the MGM Grand reportedly charges $7.29 for an energy drink on a Tuesday morning, while it charges $7.84 on a Saturday morning
My take on this unique implementation of dynamic pricing
Let me start by saying that I’m not at all a Las Vegas expert or fan. I haven’t visited in over a decade, and it’s not on my radar as a destination I need to return to. I’ve seen a lot of stories lately about how apparently Las Vegas is seeing a huge decline in tourism, and also about just how outrageous prices are getting, and how travelers are getting tired of that.
With that in mind, what’s my take on this dynamic pricing? Well, I think the first thing that surprises me is that these stores don’t actually post prices. Apparently you only find out the price when an item is rung up at the register. Is this actually true, as claimed in the story, because that’s kind of wild, no?
It’s interesting to note the comments from some tourists who were interviewed for this story, who were faced with this dynamic pricing. One man said he’s going to just buy stuff at CVS in the future, because “it ain’t about the price, it’s the principle.” Another man who loves Las Vegas asked “how does the price of a Snickers bar and a Gatorade change?”
I’m going to take the opposite approach here, and say that there’s nothing wrong with this kind of dynamic pricing on products. Clearly the pricing isn’t driven by supply and demand (since I don’t think Dasani water is in short supply, or has a short shelf life), but instead, it’s about willingness to pay.
Las Vegas is a hotel market where there’s massive demand on weekends, and then a lot less demand on weekdays. If you visit Las Vegas over weekdays, odds are that you’re more price sensitive, so you may have less willingness to pay than someone visiting on the weekend.
So just as hotels and shows and rental cars might be cheaper on weekdays, I think there’s nothing wrong with restaurants and shops being cheaper as well, in order to stimulate demand. I love the guy who said “it ain’t about the price, it’s the principle.” I’m curious what principle is at play here? Everyone is getting screwed in Las Vegas, whether they’re paying $7 or $8 for an energy drink, no?
The outrageous prices in Las Vegas aren’t because they reflect the cost of providing services, but instead, they’re intended to reflect the maximum they think they can get consumers to pay. So my only real issue here is that these stores apparently don’t post prices, as that seems kind of wild to me.
To be clear, that’s not me being a Las Vegas apologist. Like I said, I have no interest in traveling there in large part because the entire tourism ecosystem exists to rip people off, in my opinion. So I share the above guy’s desire to make decisions on “principle,” and that’s why I choose not to spend money in Las Vegas.
Bottom line
Some stores inside Las Vegas casino hotels seem to now have dynamic pricing for things like bottled water and sunscreen. I don’t think I’ve ever seen this before at a hotel, so it’s something that’s new to me. That being said, I don’t necessarily think there’s anything wrong with it (other than prices not being posted?).
Dynamic pricing exists largely to account for how much companies think consumers are willing to pay for a product, and this is a logical extension of that. Willingness to pay will be different if someone is staying at a hotel for $100 per night on a weekday, vs. for $400 per night on a weekend.
I’m not saying I love this practice, but it just seems like business as usual for Las Vegas, and like a logical way to extend dynamic pricing, especially in a market with as much pricing variation as Las Vegas.
What do you make of this unique use of dynamic pricing?
This makes me think of a very interesting comparison that I think most Americans are aware of or have experienced but never give a second thought.
Restaurants have been doing this for decades.. You can go to [insert restaurant here] and order let’s say a roasted chicken entree at lunch and pay $16 from 1100-1600 and the exact same chicken prepared the same way with the same two side dishes might be $19 at dinner....
This makes me think of a very interesting comparison that I think most Americans are aware of or have experienced but never give a second thought.
Restaurants have been doing this for decades.. You can go to [insert restaurant here] and order let’s say a roasted chicken entree at lunch and pay $16 from 1100-1600 and the exact same chicken prepared the same way with the same two side dishes might be $19 at dinner. Some places will even include a pop or iced tea or other beverage with lunch, but charge for it at dinner. This obviously has absolutely nothing to do with the cost of procuring or preparing the food - I guarantee the chef doesn’t get an hourly pay bump for working dinner service, and the restaurant has already paid Sysco for that case of chicken chunkertons.
This simply reflects that more people go out to eat dinner than go out to eat lunch. The lower lunch price is a way to get more people in the door for a typically slower meal. (Also, some restaurants offer smaller portions at lunch, and will sometimes let you order the lunch size meal at dinner for the lunch price, provided the meals are materially different from each other.)
For some reason, I don’t think it’s slimy to charge more for the same food later in the day. Do I think it’s slimy to charge more for sunscreen on Friday? Totally. I guess the thought problem is why am I, and apparently others, intrinsically bothered by only one of these practices? They’re basically the same.
ResortsWorld doesn’t post prices. While it isn’t a supply issue, it is absolutely a DEMAND issue.
We just got back from a trip to Vegas. Can confirm that at the ParkMGM there was no pricing at the sundry shop, or at the grab and go store by the Dolby Theater.
I'm down for requiring stores to post prices with the goods.
Of course, if you post the price and then it changes while you're in the store (e.g. e-ink)...
...I expect a lot of stories for NotAlwaysRight/NotAlwaysWorking.
The more annoying thing to me is that vegas has a history of price hike policies like this over the years. But the real issue for me is that multiple hotels implements them concurrently. That tells me the hotels regularly meet to collude on prices and they get away with it.
In fairness, all three hotels mentioned in the article are owned by MGM Resorts. You can’t technically collude with yourself.
nobody is surprised that a city built to exploit visitors is actually exploiting visitors.
Soaking people for every bit more is exactly what’s wrong with Las Vegas. It’s not like the lower prices are any bargain either.
Coming from Europe, I was surprised to find Dallas last year had much less transparency on pricing:
- restaurants (except fast food) did not post menus outside, and often not on website
- laundries did not have a pricelist in the window (or even what they services they offered)
- tailors for alterations did not have a pricelist in the window (or even what services they offered).
- many small businesses...
Coming from Europe, I was surprised to find Dallas last year had much less transparency on pricing:
- restaurants (except fast food) did not post menus outside, and often not on website
- laundries did not have a pricelist in the window (or even what they services they offered)
- tailors for alterations did not have a pricelist in the window (or even what services they offered).
- many small businesses had no website
And higher memberships of Arts Organisations were all "call (for pricing)" without showing prices (which is pretty common on the UK equivalent websites)
Is that lack of transparency general to the US, general in non-pedestrian cities in the US, or only in some cities (including Las Vegas clearly!)
Posting menus outside a restaurant is just much less universal in the US, yeah. I suspect that more of our restaurants have most of their customers drive to them, rather than walk up.
I don't think it's transparency, exactly--restaurant prices are generally fixed, and menus are nearly always available in the entry. Restaurants (outside of Vegas...) aren't trying to pull anything shady. Just different customs.
That may just be a big city vs small city thing then. Because it's rare that I see restaurant menus without prices other than in touristy areas of cities where the restaurant is absolutely being shady and I travel A LOT and I question restaurants with no visible prices. In my experience when they omit it from their website then it's either a very small restaurant where they have no idea how to maintain a website or a Michelin start restaurant.
"It's sunscreen, Michael, what could it possibly cost? $42?"
$42 for sunscreen? WTF? Remind me never to go to Las Vegas.
The Journal has done us all a service by drawing this to our attention.
The city is off my list.
Well $6 for a bottle of water should already clue you in when it cost 17 cents at Costco. Not that anyone buys 1 bottle of water at costco.
They probably figure half of Americans are fat and lazy cbs would be more willing to pay $42 than to walk in the heat for 30 minutes to Walgreens.
*At least* there should be price tags. The technology exists for e-ink shelf tags that can be changed wirelessly. I think everyone knows Vegas is a ripoff, and dynamic pricing isn’t actually that unexpected… but its the lack of transparency that angers people the most.