For those who argue that F1 races do not have major economic impact on the cities involved, it is worth noting that the Austin American-Statesman, the major local newspaper in the city of Austin, Texas, is reporting that the city’s hotels have become so greedy that some of the F1 tour operators have turned to other cities because the prices are simply too high. Cities such as San Marcos and even San Antonio are being used because of the exploitation going on in Austin. The tour operators say that the Austin hotels need to realise that they cannot charge more money than Monte Carlo, because the fans will go to Monte Carlo instead.
The average daily rate in Austin at Grand Prix time last year (according to the official figures) was $393.69, while San Antonio hotels were averaging $184.20. San Marcos is only 30 miles from the track and San Antonio only 50 miles, with a motorway all the way. San Antonio hotel revenues were up 40 percent as a result of the race last year, with about $5 million being made in the city as a result, without taking into account hikes in food and beverages. This year the prices in Austin are expected to be even higher because of the direct clash between F1 and a big college football game on the Saturday night. The latter will have an audience of around 100,000, many travelling in from Oklahoma. Some will no doubt take advantage of the trip to take a look at F1, but other F1 fans will be deterred from visiting because of the gouging going on.
The hotels argue that it is a question of supply and demand and it is not the first time that hotels in cities with F1 races have exploited Grand Prix crowds, but the down side of making a quick buck is that the fans tend to avoid going back each year, which they would probably do if the rooms were being offered at more sensible rates. Some hotels in Singapore found that they were left with no-one wanting their rooms at the advertised price in the second year of that race and they had to discount frantically in the days before the races, in order to fill them.
As with all supply & demand situations, inflating your rates based on a predicted demand will alter the demand you’re basing your inflated rates on. The rates will then fall in order to push up demand again but usually too late to consume all of the supply and all those who paid the originally inflated rates become disenchanted ensuring reduced demand the next time.
Eventually, everything levels out back where it was because demand falls away and whatever was creating the original demand disappears because there’s noone coming to watch/buy.
I’m from Austin (wasn’t born here but got here as fast as I could) and I was embarassed to see the prices last year. It will catch up to them if not this year, next.
Price elasticity.
Local economic impacts are different than local price changes. For example, it is quite possible that the higher prices, which presumably increase profits, go entirely to corporate headquarters and are dispersed to recipients in quite different regions.
One needs to look at the real local impact – such as whether more cleaning ladies and other service workers were hired, or at least paid overtime, etc.
There probably was a local impact during the construction of the track, and there may be in the future should more rooms, restaurants, and other peak-load facilities be built – but as you point out, there also is a chance that given the price gouging as well as nearby alternatives, the peak load already may have passed.
I went last year and paid a $200 a night for a horrible bug infested hotel miles from downtown. I’ve been trying to locate a place for this November and now see the prices have indeed gone up even higher! As much as I love to be in Austin, I’m going to have to look elsewhere. Hopefully campsites will be set up in the future.
Yep. I’m not going for exactly that reason. Airfare from Seattle, lodging (@ $400/night!!!), rental car, food, etc. = too much money – and hence a no-show. I’d rather spend that much money for a week in Tofino on the west coast of Vancouver Island with my wife. I truly think the FOM machine is broken; have they forgotten this is discretionary spending and we’re not all millionaires? Money I might have spent on F1 is going to get spent, but not on them.
Funny . They raise their prices . Americans such as myself go to the Canadian GP( from CO I might add ) and await the NJ event instead . Yeah that ought to work out real well for the Austin F1 race considering last years event was half empty and the reviews ( of the event and the venue ) were less than stellar . Greed vs Common Sense . Greed winning the battle with common sense soon to win the war ( again from a US F1 fan since 1964 )
You might re-think those comments about the event and the reviews. I was there and the stands were full and the venue was wonderful.
Yeah, and I also paid the hotel bills. Entirely valid complaints.
Half empty????? Bad reviews????? What are you talking about? 116,000 on Sunday. Over 60,000 for Friday practice!
i was shocked to see the advertised hotel prices in the range of $500-$1000 for what normally goes for $125. that is totally unacceptable and it is proper that this practice is brought to light. i sincerely hope they get the message and fall inline. we understand the need to make money but that kind of markup is disgusting and is a self inflicting wound in disguise.
For last November’s F1 race not only were Austin hotel prices higher than Monaco but hotels in Austin/San Marcos asked for unreasonable cancellation periods of 3 month’s or more. Last year’s race and hospitality were excellent. If greed takes over US fans won’t go. Just consider 100,000 fans for a football game. Tells you everything.
Solution for Abu Dhabi: stay in Al Ain…. closer than Dubai, too.
San Marcos is a good option. Only 30 miles away while San Antonio is actually 80 miles from Austin.
I work for a US company and our Division HQ is Austin, so I know it fairly well. As well as being well connected by road to Austin, the F1 track is in South Austin and in the direction of San Antonio (go see the Alamo and the great sunken river walks) and San Marcos (where there is a great out of town mall my wife loves!). So it can make economic sense to stay out of town – but don’t miss 6th street.
I’ve been a resident of Austin since 2003 and a long time F1. I actually lived in Bahrain when their track was under construction and moved out the year before the first race. So I was excited when I found out F1 was coming to Austin. Luckily for me I live 15 minutes from the track, even on qualifying and race day!
But for as long as I can remember the City of Austin has voiced it’s concern about the lack of hotels in the city. Austin plays host to several big events throughout the year such as Austin City Limits and SXSW. It’s gotten to the point that the city is currently giving big incentives and tax breaks to developers of hotels to open up in the city. Currently there are 3 or 4 hotels under construction, along with many more that are planned. Hopefully these will increase the supply causing the prices to go down.
JW Marriott with 1,012 rooms, estimated completion date Nov 2014.
Hotel ZaZa (boutique hotel) 160 rooms & Fairmont Austin 1,000 rooms,
Hyatt Place, 300 rooms, estimated completion Q1 2013.
ftp://ftp.ci.austin.tx.us/DowntownAustinPlan/Emerging_Projects/emerging_projects_jan_2013.pdf
On another note. Either the race or the local football game has to move to another weekend.
It was interesting to see the same discounting phenomenon actually occurred in Austin in the last few days leading up to the race. Hotwire rates 2 weeks prior were over $300 per night for a 2 star hotel, but by the Wednesday before the race, there were 3.5 and 4 star hotels advertising for $150 or less per night. With the football game next year I expect I’ll stay in San Antonio, but I’ll be keeping an eye on the discount sites for good deals.
I live in Fort Worth, Texas which is about 3 hours by car. I went to last years race and I went to Indianapolis the first year of F1 there. I knew when we went last year that I wouldn’t go back this year because of the cost. The tickets were expensive and I expected that but the hotel cost with a three day minimum and the high prices make this a once every few years (or maybe just once like Indy). I will say the race weekend was fun and we had a good time but the pricing could make this an event that struggles to continue.
I’ve already moaned about this on Twitter, but Austin is mad.
Four of us are sharing a flat in Monaco this year for the princely sum of 350 euros a head for the week. The same group was looking to share a flat for a week in Austin, and I got quoted $1k a night for a flat that’s $100 a night for the rest of the year.
Based on today’s exchange rates, a week in a flat in Austin is 1337.50 euros each for the four of us, or just shy of A THOUSAND EUROS more expensive than Monaco.
Ridic-a-dick-a-donk-ulous.
I booked some accommodation in downtown Austin for just over £300 for the whole week ! This was before they fully realised the extortion potential . I then found that I wasn’t able to go the the race after all and @F1Kate kindly pointed me to someone who could take benefit of it in my absence .
I was happy to let it go for free as long and the owner was willing . Unfortunately , the owner could not resist making me cancel what could have been a straightforward transfer only to jack the price up even further !
Never mind eh ?
I got really lucky in Austin last year, and found a reasonably priced place. As I was collecting my keys the woman told me that had she known how much money she could make off the GP, she would have charged me PER NIGHT what she charged for the whole stay.
Which is why I’m on the hunt for somewhere new this year. San Marcos, I hope you’re ready…
Completely agree Kate. The hotel people and others here totally bought into what COTA was selling, and they got burned because of it.
Hotels in San Marcos were gouging last year, too. We found housing options with friends, and are avoiding the hotels completely next year.
Curious if the same thing happens during SXSW?
I’m going for the first time this year and finding accommodations was challenging. $900 for a 3-star hotel is a bit ridiculous even if it’s downtown!
I briefly looked at the prices of hotels for this upcoming sxsw and during the weekend of the race and the rates look about the same. But you have to keep in mind sxsw is 2 weeks from now so the prices could be higher due to the short notice.
At Facebook.com/FoF1ATX (Friends of Formula 1 Austin Texas), we broke this story well before last year’s race, tweeting and posting about it while hardly anyone seemed to notice. We heard rumblings from people in the hotel industry in the last couple of months before the race after their local hotel association meetings.The complaint was that in making room blocking deals with Circuit of the Americas, they were fed an impression that the F1 crowd nothing but rich jetsetters to whom cost is no object at all.
The room blocking artificially reduced supply and drove up prices astronomically. We and others told the hotel operators that the prices were too high, that the typical F1 fan is not a rich guy, etc, to no avail. They found out the hard way. The high prices drove people away, mostly to San Antonio, which as only about an hour’s drive from COTA, and is a very popular tourist destination.
About 8 weeks or so before the GP, some nice people from Expedia / Hotels.com came to us for help selling off the surplus of rooms that were about to hit the market in Austin as the blocking contracts began to expire one by one. They said that despite people being told there were no rooms, several thousand rooms had not been booked and would hit the market soon.
The Expedia people explained to us that they had pleaded with Austin hotel operators to lower the prices, to no avail. They said their experience with F1 GP hotel pricing worldwide indicated the Austin prices were way out of line and that people simply would seek alternative arrangements in much greater numbers than the people who would pay the inflated price. Apparently, the hotel operators would have nothing of it, as they had bought into what they had been sold by the circuit.
We and other local F1 fans, having been to many races and F1 GPs ourselves, already knew that the prices were too high and tried to make that known, to little effect.
Regarding your last line about late discounts, that already happened here last year. As the blocking contracts expired, predictably, availability went up and prices went down. Even during the week before the race, there were rooms available downtown where there had been none previously. Throughout the last 3 or so weeks preceding the GP, over 220 Austin area hotels had rooms where. They had been “sold out” for months prior. I even heard of rooms new bookings at the Four Seasons downtown on Friday thru Sunday nights.
The Austin hotel supply never did sell out of rooms that weekend.
What’s interesting is that now, even prior to this Statesman story, and even with the University of Texas Football crowd of 100K+ on Saturday night, there are thousands of rooms still available in Austin proper from ~$160 per night. We’ve tweeted & posted about it. That’s hundreds of dollars cheaper than the early prices were months before the first GP. It’s about the same as the reduced pricing in the last weeks before the race. There just aren’t rooms available downtown. Yet
Really? I have not found one.
Lots of rooms available in Austin from $162 per night. This based on a 3-night search, checking in on 11/15 and out on 11/18. If we did single night searches we’d probably find many more rooms and lower prices.
http://www.hotels.com/search.do?destinationId=1496344&destination=Austin%2C+Texas%2C+United+States&searchParams.arrivalDate=11%2F15%2F13&searchParams.departureDate=11%2F18%2F13&rooms=1&searchParams.rooms%5B0%5D.numberOfAdults=2&children%5B0%5D=0&asaReport=HomePage%3A%3ANoSuggest&searchParams.landmark=&hotelId=#vt=LIST&rl=CITY%3A1496344%3APROVIDED%3APROVIDED&pfm=1&dn=Austin,+Texas,+United+States&cd=11/15/13&dd=11/18/13&nr=1&pn=1&so=PRICE&pfcc=USD&r=2&cpr=0
Sort by Prices: Low to High.
Don’t forget there are small cities north of austin that connect with the F1 area on the 130 tollroad. Waco (2hrs), Temple (1hr), Georgetown (45min), and Round Rock (25min) would be thrilled to have your business.
How sad to hear what is happening with the hotels in Austin right off the bat with their new race.
Compared with-admittedly years ago-in Montreal where I enjoyed reasonable rates for several years in a row…which nurtured my growing interest in F1, and helped make me the fan I am today.
Joe – Not having been to Austin, how does this compare to other cities you’ve visited? Say Melbourne (which in my experience has expensive hotel rates even when there is nothing on in town).
Melbourne is bigger therefore has more choices if hotels, but big downtown options are ridiculous. I have not stay on a hotel in Melbourne for maybe 10 years.
I’m from Houston and I skipped the F1 race because of the hotel pricing. It was absolutely ridiculous! The worst gouging I’ve ever seen.
I searched and search for affordable hotels for the F1. Could not find any…almost didnt go but was lucky to have a friend 45 mins from the track. The costs were outrageous.Austin best deal with this or cota will be short lived.
i had visions of spending a week in Austin with my wife, coming to town on Thursday before the race and leaving for home the following Wed or Thurs.
Seeing the local sights after the F1 crowd went home.
Not even remotely possible based on ALL the inflated costs, including the air fares. The only think I’ll ever afford out of Austin is Tito’s vodka from my local store.
Ah well, there’s always New Jersey in 2014!
The Circuit of the Americas is hosting a Grand-Am race this weekend. Rates for downtown hotels with well-recognized names are going for $200-250 per night for the weekend. Lower prices are available away from downtown. Smaller crowd anticipated than what F1 brought, but also lower prices. Funny how that works.
Smaller crowd? Yeah, like maybe 10K people. Really shouldn’t affect hotel rates at all unless there’s something else going on as well.
Funny story about this Grand Am race, a few months ago a new story appeared where they quoted COTA reps saying the circuit would total over 1M people in attendance by May of this year (yes, 1,000,000. Not a typo).
http://www.kxan.com/dpp/news/local/austin/cota-to-draw-more-than-1m-fans-by-may
They spelled out their plan to reach 1M. It was as follows:
“The Grand-Am auto event will take place Feb. 28 through March 3. Promoters estimate a maximum attendance of 300,000 during those four days.
The MotoGP motorcycle event will take place April 19 – 21. Promoters estimate a maximum attendance of 225,000 during those four days. (my note: it’s actually 3 days)
The V8 Supercars auto event will take place May 17 – 19. Promoters estimate a maximum attendance of 300,000 during those three days.”
300K for a Grand Am weekend? How precious! In a good year (like 2011) Grand Am pulls 500K for the entire season. COTA will be extremely lucky to hit 20K for the weekend.
Some of those other projections are pretty, um, optimistic as well.
After sleeping on it, I realize “funny how that works” may have left a wrong impression. I do believe supply and demand dynamics were at work for the Nov F1 race, but that’s not the whole story.
Getting repeat business, for many years, is the larger story and I do agree that many hotels may have inadvertently shot themselves in the foot with price gouging. Hence the pushback we now see. I experienced price gouging in Montreal for the Canadian GP and it does leave an unpleasant taste.
Not surprised. I like it when people think F1 is a license to print an unlimited amount of money.
Joe and others, while Austin hotel owners did raise the rates for the F1 week, they did nothing wrong. This is simple supply and demand. If people don’t like it they won’t pay it – but as it turned out, they did. Perhaps there were some rooms not claimed because CoTA or someone else blocked these rooms.
you obviously did not pay for hotel rooms and so do not feel aggrieved.
It’s not “simple supply and demand” when the supply was artificially and drastically reduced early on, resulting in insane price increases.
Tim, I saw the video and read the story at KXAN.com. Those numbers you are calling out were for a Mass Gathering permit in which CoTA estimated the MAXIMUM number fo attendees. You’re fooling yourself if they (CoTA) think or even thought (past tense) that anything besides MotoGP could even compare to F1. It’s just a number, stop trying to make everything sound so bad.
Tim, this is why people don’t like talking with you because you twist numbers around to meet your agenda.
Actually Steve, I put the link there and quoted EXACTLY what you’re talking about so everyone could see for themselves. Adding “maximum” to those numbers is merely COTA’s way of using grossly exaggerated numbers to sway the uninitiated…the non-fan. Then they have an escape route when a knowledgeable race fan calls them on their ridiculous claims.
COTA: “Oh, 300K people for Grand Am or Supercars? That’s merely a **maximum**”.
LMAO. A maximum? Why not just say 500K then? Or a Miliion? After all, it’s just a maximum.
300K is COTA’s very own number and is, as I said, a GROSS exaggeration. If they don’t want to be held to those numbers, then they should present realistic ones and not be so incredibly loose with the figures. Those numbers are nowhere near the realm possibility. That’s not “fudging” the numbers. It’s GROSS misrepresentation.
300K for freaking GRAND AM? Please! Get real. High school football games attract bigger crowds than Grand Am does. 300K for V8 Supercars? They don’t pull those numbers even at flagship events in Australia where it’s more popular than F1. It’s like their NASCAR. Even F1 was well short of COTA’s projection of 300K. It should have exceeded it though with good promotion. NO…ANY promotion.
Hell, even 50K would be a gross exaggeration for a Grand Am event. There’s one thing you got right though. They misrepresented the numbers for ALL of those events to sway opinion in an effort to get tens of millions in funding $$$ from the State of Texas. It’s funny and disturbing that you actually use this as justification for the crazy numbers. You make it sound like it’s ok to lie for profit from taxpayer money.
I didn’t twist ANY numbers, COTA did. I quoted them directly.
I only know of a couple of people who don’t like talking with me, and it’s not because I twist anything. It’s the exact opposite. It’s because I stick right to the facts and won’t tolerate the twisting. I won’t sit idly by while you spin and torture the facts. Indeed, that’s the very reason we have the following we enjoy on Facebook and Twitter.
It says a lot about you, though, that you continue to defend what’s going on here when lifelong race fans in the area have reached their limits of stomaching this nonsense.
I went to the race last fall, and found a different world than that posted here. It didn’t take a lot of research, but I did research before jumping into the Formula 1 vacation fray. First of all, I set my sights to experience the race weekend (a must), get a feel for the locale and the people, and enjoy that part of Texas without getting the desperate feeling that I was in over my economic head.
San Marcos turned out to be the place to stay – not only from the cost perspective, but from the logistical sense as well. We stayed at a very clean and organized Motel 6 (or as I like to refer to the place as an urban campout). We accessed the track through the back door from there, and had no problems with traffic nor accomodations. A bit of a hassle leaving Lot L post race, but once on surface streets travel was a breeze.
We visited the fanfest downtown and enjoyed the bands and the atmosphere, and made sure to eat at one of the local establishments rather than at a booth. There was no wait for a table.
Next to the motel in San Marcos was a charitable thrift store where we purchased reasonably priced all-weather racing fan equipment of raingear (just in case), blankets, and the like; donating all of that stuff back after the race.
I could go on and on, regarding nice restaurants overlooking the river there, and the subsequent visit to San Antonio after the race where the lodging prices dropped off by more than half after the Circus left town.
I’m not planning to attend this year, but for chuckles, I just got on Motel 6′s website and saw that the weekend rates for this year’s race weekend is $44/night.
I guess I’m just not elite enough to complain about not having a reasonably priced room available to me with all the amenities right in Austin, but then again, I came to Texas to watch ‘em race, not turn my pockets inside out.
Hey Robbie! I’m happy to hear you got to experience a slice of the Heart of Texas and enjoyed it so much. San Marcos is a gorgeous place, one of the gems of central Texas. You should see it in the summer!
We’re very proud of where we live and of all that it has to offer. That’s why we find the gouging so distasteful. It left a bad taste in the mouths of many people, and we hate to see that. We want Austin visitors to enjoy themselves as you did, and to return later and do so again!
There were some good deals out there and I’m glad you found one of them. There are always exceptions. The biggest problem was in Austin itself. There’s a reason there was no wait for a table at that restaurant. Hotel prices had driven so many people elsewhere.
I can’t seem to be able to reply to any post here. I think the “Post Comment” button is somehow hidden while I’m tryping.
Anyway Tim, don’t you think the “Maximum” number is just a number set in space so that the surrounding counties can see what might be coming their way? There’s no conspiracy theories going on here just an ESTIMATE so that they (CoTA) can get the required Mass Gathering Permit. Stop with the CoTA bashing here..
Well, you seem to have managed it somehow.
So they “estimated” 300K for the Grand Am weekend when they’ll likely not even hit 25K?
They “estimated” 300K for Aussie V8s when even the biggest Supercars event in Australia – Adelaide – averages about 200K over 3 days. Even Batthurst, Sydney, & Surfer’s only draw about 160K-180K over 3 days. Remember, these are not typical Supercars events. They’re the biggest ones. In 2010 Supercars averaged about 85K over 20 weekends, including some 4-day weekends.
They “estimated” 225K for MotoGP when the average U.S. weekend attendance for Laguna Seca and Indianapolis is ~135K & average weekend attendance for the 2012 season was 123K.
If COTA could pull these crowds for those events, it would be great for everyone, but it won’t happen. Being realistic is not “bashing”. How are these numbers an indication of what “might be”? How are they anything but a gross mischaracterization?
The actual MotoGP and V8 Supercars numbers are really very good. The question is this: Why does COTA feel the need to make wildly exaggerated “estimates” of attendance for these events at COTA?
Tim, the reason is a “Need for Seed!”. Those dishing out the METF dinero like to see big numbers. I for one don’t support over exaggerating attendance numbers to fool non motosports people.
Joe, I’m making a new entry not commenting on a particualr string.
Tim, for the love of God, it’s an estimate for permit purposes. It’s a MAXIMUM number and you know this. Travis and surrounding counties need a number, a number that mignt not be reachable but still a number so they can have an idea. Stop with the hatred towards the track, Tavo’s gone and he’s moved on (perhaps to bigger and better things as long as he gets his contracts signed). If CoTA really expected as many for Grand Am as they had for F1 then the shuttles would be running, there would be more food vendors on the list, the parking wouldn’t be “cash”
Tell Vance this has nothing to do with the METF.