On Tue, Feb 24, 2015 at 5:21 PM, Bruce Johnson <johnson@pharmacy.arizona.edu> wrote:

> On Feb 24, 2015, at 3:05 PM, Richard Aiken <raikenclw@gmail.com> wrote:
>
> Your motel rooms are constrained by the fact that THEY CANNOT MOVE. Your motel rooms aren’t a trade good for sale.
>
> Sorry. But I disagree. They are very much trade goods for sale and also carry a rather viscious expiration date; once a given date has passed, any rooms that weren't rented represent wasted inventory.

You cannot move your motel rooms to a region of higher demand.

That is certainly true. But then you can't move a piece of real estate to another region, yet isn't it also a trade good?

And - if you're willing to work with other local businesses, such as by selling package deals that include discount admissions to local attractions - you can *create* higher demand.

If someone puts up a skyscraper in the nice mountain views, you cannot just move around them.

Which is why the cities here have very strict limits on building heights . . . .

Ergo they’re not goods, they’re a service. You have a capital investment in providing that service (the motel), but still you’re not selling motel rooms. You’re selling a night’s use of a motel room.

True. But that night's use is still a trade good, one that's sold in a rather volatile market place.

(Although for some reason a certain percentage of guests apparently think that all hotel rooms should cost the same low price, regardless of time of year, location and amenities. A couple of times, I haven't been able to resist saying to a particularly dense touron, "You have heard of capitalism, haven't you?").

Also un-rented rooms aren’t ‘wasted inventory’ unless you blow them up. Heck you don’t even have to sink much in the way of maintenance costs into them; un-rented rooms don’t generally need to be cleaned. :-) So no they don’t ‘expire’.

Empty rooms incur constant costs. For example, you have to cool/heat them to a certain minimum or any arrivals you get (whether reservations or walk-ins) will check right back out. You also have to pay someone to check them at least daily for things like spiderwebs and mold. And of course there are all the other daily costs associated with running any business.

Any rooms which do not get rented represent lost money, since what they would have sold for does not help you recover the above unavoidable costs. Yet you can't sell your rooms too cheaply either, because that's borrowing trouble. A guest who pays only $40 for his jacuzzi room mid-week in the off-season will complain online about your rooms being "far too expensive" when he pays three times that much for July 4th weekend in the same room.

This isn’t like buying food for a restaurant, where if you don’t sell as many fish dinners as you anticipated you end up with unsold fish isn’t going to last. That is a ‘vicious expiration date’.

You could sell the uncooked fish as a lunch special at a steep discount the following day and probably at least recover your food costs.

You can't sell anyone the previous night in an empty motel room.

This is akin to hauling passengers or freight in traveller. Jumping without a full load doesn’t somehow reduce the value of your ship, it just means you make less money that jump.

Which means increased effective costs . . . and eventual bankruptcy, if you keep doing it long enough.

Richard Aiken

"Never insult anyone by accident." Robert A. Heinlein

"A word to the wise ain't necessary -- it's the stupid ones that need the advice." - Bill Cosby

"We know a little about a lot of things; just enough to make us dangerous." Dean Winchester