Thursday, February 4, 2010

Profiteering: Now It's News

A few days ago, it was a columnist bemoaning price-gouging for the 2010 World Cup.

Now the Johannesburg Times has a news story on the topic.

This is a bit of a predictable story, with an arc that we can anticipate. We've seen this before at other host countries at the Olympics and World Cup.

Here's how it goes:

Prices get jacked up as people in the host country anticipate insane demands for all services. A few saps pay those high prices.

But mostly, they scare off potential buyers. Hoteliers, air-carriers, ticket touts ... try to hold the prince line. People will come around, they figure. The fat cats will emerge, and we will shear them. We just have to hang tough. And they wait. And wait.

About a week before the Big Event, with all sorts of inventory stacked up, the whole travel/tourism crew panics. The foreigners aren't coming. The Russian oligarchs or American hedge-funders or Saudi princelings. They aren't showing up in the numbers everyone anticipated. And prices tumble.

Some of the greedy get burned. They wait too long, and they don't fill rooms and don't fill planes and don't sell tickets. And tough for them.

And at the last minute, some brave and resourceful fans slip in and buy during the trough of panic and actually see the World Cup for a reasonable rate.

Right now, South African merchants still believe they can turn the World Cup into a gold mine. But they forget about the scope of the global recession. They neglect to take into account that not a single country with significant wealth is within a 10-hour plane ride of Johannesburg. They are pricing out the African fan, who is close by but doesn't have much money, as well as the European fan, who has some cash but sees ruinous airfare costs and difficult commutes.

The Times, however, has figured this out. And perhaps the story we linked to will bring around some of the greediest.

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