AnthonyGA

According to an article today in the International Herald Tribune, six of the top hotels in Paris have been fined nearly a million dollars for running a price-fixing cartel that raised prices to an average of more than 700 euro per night. The hotels are the <b>H&ocirc;tel de Crillon</b>, the <b>Four Seasons H&ocirc;tel George V</b>, the <b>H&ocirc;tel Ritz</b>, the <b>H&ocirc;tel Plaza Ath&eacute;n&eacute;e</b>, the <b>H&ocirc;tel Meurice</b>, and <b>H&ocirc;tel Le Bristol</b>. The full story is available at

http://www.iht.com/articles/2005/11/...ness/hotel.php

francophile03

I always thought the rates to be very overpriced, but then again I can't afford to pay them anyway. But it's good they all got deservedly fined.

Christina

This is really bizarre to me, as it counters the idea of competition and that hotels really do not usually want to share marketing info, pricing strategy, occupancy, etc. with their competitors. Especially because there are six of them, it makes it even stranger that they could all agree to fix prices together -- usually you get more of a market with three or more competitors.

I just read recently that the Crillon was bought out by Starwood and they are all now non-French-owned.

This seems very embarrassing for them, I wonder how they are going to respond to this.

111op

Why should this be surprising? Similarly, wasn't there a case regarding collusion between the two auction houses Sotheby's &amp; Christie's?

Presumably collusion makes economic sense to these places and that's why they're colluding.

I don't think that this would generate much negative publicity. After all, Sotheby's and Christie's are still selling art. There's only one Crillon in Paris. Ditto one Ritz, one Four Seasons, etc.

I don't think that their cachet will be much undermined.

Intrepid1

There's obviously a market for this level of hotel and I also suspect this revelation will do little to dampen it.

The article makes it appear that the evidence is pretty conclusive.

bardo1

Anthony,

Interesting article. Even more interesting is that there are places that charge 500Euro/night before taxes for a single twin bed in low season - and a steady stream of customers willing to pay it. Like others here, this doesn't affect me at all.

mah1980

It seems pretty odd to me that these competitors were e-mailing their private info, although hotels should be able to charge whatever they want in the free market.

If people are willing to pay that much, then what's the problem? The beauty of the free market is that one could just go to another hotel.

WillTravel

I would guess that these hotels pretty well have a set clientele. There are people (like say ambassadors, CEOs of Fortune 100 companies, etc.) who will only go to these top six hotels in Paris, and never consider anything else, no matter what the cost. So it's a perfect market for collusion in that sense.

Eloise

WillTravel is right about the clientele.

What bothers me is that WE are paying their bills - for the ambassadors, as taxpayers and for the CEOs, as shareholders...

111op

Why are we paying the bills?

I don't know if these are publicly traded companies -- I guess Four Seasons must at least be part of something. If collusion brings higher profits, wouldn't these trickle down to the shareholder?

The shareholders should be happy for collusion.

mah1980

I think she means why &quot;we&quot; as the citizens of whatever country the ambassador is from should be paying the inflated prices of these top hotels. Or, &quot;we&quot; as shareholders of publicly traded company XYZ whose board and c.e.o. stay at the Ritz on the shareholder's dime, thus decreasing profits.

Intrepid1

I wonder what would have happened if one of these establishments had decided to undercut the fixed prices?

mah1980

The reason why their plan was so successful is that these six hotels know that price is not a determinative factor in the minds of the their consumers.

I don't know the occupancy rates of these hotels, but I would venture to guess that these hotels have no problem attracting guests, regardless of their rates. So what would be the benefit if one of the hotels lowered their prices? All they would do is make less money per room.

111op

Ah, thanks mah. That makes sense. I can't believe that I was that dense.

Echoes of Tyco, more or less, in other words.

Eloise

111op: Exactly! Not to mention some of the other equally egregious examples, of whom the latest is Conrad Black. A Canadian, he renounced his citizenship to become Lord Black in the U.K. Now that he's been indicted in the U.S., he suddenly wants his Canadian citizenship back...

111op

I had no idea who Conrad Black is:

http://www.cbc.ca/news/background/black_conrad/

Sometimes I do wonder if I actually work in the financial industry. Maybe I should work for Fodor's instead.

mah1980

I read an article about Condrad Black,aka Lord Black, in Vanity Fair. Is it true that he renounced his Canadian citizenship just so he could become a British Lord? That's pretty lame.

I recall that the article I read said that is very unlikely that Canada would allow him back into the country if he was convicted in the u.s.

richardsonsnm

My wife and I have stayed at the Athenee and the Four Seasons Geo V. One time we were unhappy with our 800 euro room at the Four Seasons because we were over the delivery area, we were scheduled to come back to Paris and stay a few more days at the end of our trip, I was irritated and cancelled out and called the Athenee to book, when I went to check out, I was met by the front desk manager, she apologized for the problem, but she knew I had booked at the Athenee!! I was offered a COMP suite on my return if I came back, obviously these people have access to computers and talk.

TorontoSteven

Mah, Black renounced his Canadian citizenship in part as a protest. He was offered a peerage in the U.K. but Canadian law prohibits Canadians from accepting other country's honours (a law which is not enforced and is constantly broken), but the then Canadian Prime Minister at the time (Chretien - who is himself a shining model of unethical behaviour) did not like Black and therefore enforced the law.

Eloise

Mah1980: It is indeed true that Conrad Black renounced his Canadian citizenship to become Lord Black. It was basically a gripe match between him and the then Canadian Prime Minister, Jean Chretien. Black's Canadian papers were strongly anti-Chretien. No surprises there. Chretien was a Liberal and Black, obviously, a Conservative. When the &quot;lordship&quot; for Black was first mentioned, Chretien had a law passed that Canadians could not accept British titles. So Black said, &quot;Go to h***,&quot; and renounced his Canadian citizenship. The cute thing about all this is that a former Conservative Prime Minister, Brian Mulroney, had appointed Black a Canadian Senator when he needed a majority in the Senate. A pox on all their houses!

And no, it is highly unlikely that Canada will give him his citizenship back. Why should it? He and his equally extravagant and opinionated wife, the former newspaper columnist Barbara Amiel, were pretty much disliked in Canada to start with. And they spent most of their time in London and Palm Beach. What's in it for Canada to take him back?