DIFFICULT MORAL QUESTIONS
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Question 126: May a desk clerk implement a hotel’s devious pricing strategy?
I work weekends at the front desk of a large hotel in a major city. This is a second job, but I really need it, because my wife had to quit work to stay home and take care of our baby. However, I have some qualms of conscience about the way this hotel and many others use discounts to boost occupancy rates.
Every unit that goes unoccupied for a night represents an irrecoverable loss of income to a hotel. Low occupancy also cuts profits, or even results in losses, on food and beverage services, and reduces other revenue. In the short run, renting rooms or suites at anything over the cost of making them up and handling the accounts produces more—sometimes much more—income than not renting at all. Still, no hotel wants to appear entirely flexible about rates, or else everyone would demand a very low rate whenever space is plentiful.
A unit’s full listed price is called the “rack rate.” Most people realize it is subject to various discounts. But few realize that many hotels, including this one, will extend discounts beyond their stated conditions if necessary to improve occupancy. For example, when we have plenty of units available, you need not be employed by any government to get the “government employees’ rate.” There also is a rock-bottom rate, at this hotel called “the Manager’s Award rate.”
Even when we do not expect to fill up—and we seldom fill up on weekends—many people have advance reservations at an agreed price, and they usually pose no problem. But if people looking for a bargain call us directly to register for the same night or come to the desk without a guaranteed reservation, we try to register them at the highest rate we can. People vary a lot in aggressiveness and sophistication about bargaining. Ordinarily, no matter how many open units we have, we first offer the rack rate. Many accept it, or just ask for discounts always given to people who qualify and ask for them—for example, the ten percent discount for AAA and AARP members. Others insist on a better rate or say they will try elsewhere if we do not give them a more attractive deal. So, as necessary, we offer to register them at a deeper discount or on a half-price plan, even if they do not meet the conditions. Occasionally, people ignore the rack rate, or don’t even ask about it, and simply tell us what accommodations they want and how much they are prepared to pay, and we offer a rate somewhat above their proposal, generally for a better unit. The policy is not to give the Manager’s Award rate to most people. But when space is plentiful, we offer it as a last resort to register people whose patronage we particularly want: those who are obviously well off or whose previous record with us suggests they will run up a sizable bill.
We have been trained never to lie about rates. Saying “I can give you (or: We have available) such and such a unit at so many dollars per night” neither invites bargaining nor rules it out. But the results often seem unfair. During one half-hour stretch last Saturday afternoon I put an elderly couple without a reservation in a standard double at $161.10 (the rack rate of $179 less ten percent seniors’ discount), checked a couple with two children into a similar room they had reserved two weeks in advance and prepaid at a weekend rate of $109, and was bargained down to a half-price deal, $99.50 for a deluxe room, by someone calling on the direct line from the airport. Then I gave the Manager’s Award rate of $79 for a suite ($499 rack rate) to a man who turned down other offers; he was well dressed and wearing an expensive watch, and the doorman told me on the intercom that a woman in a mink jacket was waiting outside in their new Mercedes convertible.
This sort of thing never used to trouble my conscience, though I sometimes have been tempted to let people know they could get a better rate. But recently I went on a retreat. The theme was love of neighbor, and it occurred to me that treating people so differently, based on how aggressive and sophisticated they happen to be, does not seem in line with loving them as I love myself. The retreat included some group discussion, and I brought up the problem. A businessman making the retreat with me argued that hotels are not taking advantage of people who do not get the better deals but are being taken advantage of by those who do, just as creditors strapped for cash are taken advantage of by debtors who know of the problem and demand deep discounts for paying what they owe. I am not sure what to think about that, but I still feel uneasy.
Analysis:
This question concerns cooperation in deception. Hotels that propose negotiable rates as if they were fixed are unfair to people insofar as that marketing strategy is deceptive. Given that the questioner does not lie to people who ask him about the hotel’s rates, however, what he does in implementing the hotel’s marketing strategy is to be evaluated by the usual norms for cooperation. It does not seem to be formal cooperation, and as material cooperation it might be morally acceptable. In general, he should do his job as he has agreed, but when he judges it fair to all concerned he should give people who fail to bargain the discounts they could get by bargaining. Love of neighbor perhaps also should impel him to do something to overcome or mitigate the unjust structure in which he is involved.
The reply could be along the following lines:
The view that people who bargain aggressively take advantage of the hotel implies that they get unfairly low rates. That would be so if an insolvent hotel’s vulnerability were exploited by hard bargainers to rent space for less than the hotel could obtain if its cash flow were adequate. In that case, the businessman’s analogy would be sound. However, it does not hold true for the situation you describe, which depends on the economic condition of the commodity rather than the need of a party to the transaction. Even the most profitable business is vulnerable to bargaining if supplies of its products or services obviously exceed demands, and this vulnerability is accentuated whenever the service or product will quickly lose its value if not sold. For example, merchants selling highly perishable foods in great oversupply must either reduce prices for quick sale, donate the merchandise, or let it spoil. The vulnerability of hotels during periods of light occupancy is similar. Of course, like other profitable businesses confronting a similar problem, most hotels can charge enough when the good they market is scarce to make up for their discounts when it is in oversupply.
The hotel need not be taking advantage of people merely by offering similar accommodations at diverse prices, even though some pay considerably more than others.332 The differences can be justified insofar as they are necessary to make a reasonable profit under various conditions affecting the volume and predictability of sales and payments. Marketing hotel units is similar in this respect to marketing airline seats. The difference is that your hotel, like many others, regularly undercuts its own published rates in the ways you explain, whereas the airlines, though they sometimes engage in other ethically questionable marketing practices, for the most part adhere to their published fares. To obtain a certain airfare, one almost always must meet and accept the stated conditions, and ad hoc bargaining is generally excluded; but when space is plentiful, rates for many hotel units, though proposed to the public as if they were fixed prices, are only a point of departure for bargaining by well-informed people prepared to bargain.333 This marketing strategy, in my judgment, is unfair to people unaware that the seemingly fixed prices actually are negotiable.
Someone might argue that this strategy, used by many hotels, differs little from that used by other businesses whose list prices, though open to bargaining, are stated without any indication that other offers will be considered. But even though many businesses do not call attention to the fact that they are prepared to bargain, some do nothing to deceive anyone about that possibility, so that it is generally understood. By contrast, the marketing strategy you describe (which some businesses other than hotels also employ), by offering various discounted rates subject to specific conditions, intentionally suggests that lower rates are unavailable unless the stated conditions are met. Therefore, this strategy is deceptive, and, as you say, unsophisticated people are likely to be deceived.
Like any other business, a hotel should regard its patrons as associates cooperating in a common economic enterprise. Cooperation presupposes candid communication, and a hotel using a deceptive marketing strategy should replace it with a forthright one. Its goal should be to maximize occupancy in order to increase not only income but service to the public, by minimizing the waste that occurs when usable space goes unused.334
Of course, as an employee without managerial authority, you cannot make the ethically required change in the hotel’s policy. Meanwhile, you need this weekend job. May you keep it and continue implementing the hotel’s morally flawed policy?
You would have to give up the job if you were required to lie, but you say you are trained not to do that. You answer honestly if someone asks for the lowest available rate for a certain type of accommodation. Besides not lying, however, you must not share management’s intention to deceive. You carry out the hotel’s marketing strategy by proposing rates in the same way whether or not bargains are available, and by bargaining only when asked to do so. However, you need not choose to do anything to deceive potential guests or keep them unaware that they could bargain. Rather, you accept their deception as an existing condition, within which you work. Therefore, though your work implements the company’s deceptive strategy, you need not intend the deception.
Such involvement in others’ wrongdoing also can be wrong, of course, because it can lead one to intend the wrong, lead others into sin, impair one’s witness to relevant moral truth, or be unfair to those injured by the wrong. Given your conscientious concern, however, I do not think your involvement is likely to develop into sharing your employer’s bad intention. Because the wrong involved in the deception is embedded in the hotel’s policy, what you do in implementing it is not likely to lead others into sin or impair your witness. And because you need your job and giving it up would not affect the hotel’s unfairness, your involvement in its wrongdoing does not seem unfair to the victims.
You speak of being tempted to let people know they could get a better rate. Realizing now that the hotel’s marketing strategy is unjust, that temptation is likely to grow stronger. In general, do not give in to it. If you regularly give people lower rates, management surely will begin asking questions. Lying would be wrong, and admitting that you regularly violate the rules is likely to cause you to lose the job, which you need to support your wife and baby. Moreover, having undertaken to follow the rules, regularly violating them would be a breach of faith with your employer, not justified by the fact that the rules implement an unjust strategy. Inasmuch as what you do is justifiable, having promised to do it, you should keep your promise. Still, a promise may be broken if doing so is fair to all concerned, and occasionally it will be clear that potential patrons need a rate lower than the rate they would be willing to accept, that your employer would wrong those particular people by exacting the higher rate, and that you can help them obtain what they deserve without unduly risking your job. Only in such cases should you give the lower rate.
More generally, you probably should try to do something about the deceptive marketing strategy itself. As with other injustices, if you can rather easily take some action likely to overcome or significantly mitigate it, you should do so out of love of neighbor. For example, if your employer welcomes employee suggestions, you might consider saying that a more candid marketing strategy might serve and satisfy larger numbers of people, thereby winning their continuing patronage and increasing the hotel’s regular clientele. Again, when enough people learn about the deceptive marketing strategy, it no longer will be effective, and you might help hasten that day by looking for ways of publicizing it. You can judge whether you ought to take any such action by considering its probable burdens for you and benefits to the public, and applying the Golden Rule.
332. On why justice does not require the same prices for everyone, see q. 146, below.