An Econ 101 model of the world breaks down in many ways - this is one of them. If the supply is not in doubt, but the hotels all raise the prices collectively knowing that the investor meeting is being held, it could be interpreted casually as price gouging.
The situation is like a prisoners dilemma for hotels. If they all raise prices and none of them break rank in price, then they all make more money. BTW, just by pointing out the option of Airbnb, Buffet makes it more likely for a given hotel to break rank in a collective price bump.
Another way for Buffet to break gouging might be to publicly announce the price spikes as something driving consideration of future alternates for his meeting. But his past behavior makes that unlikely given that he would likely have to shift to areas with larger travel markets so as not to be a large percentage of the existing travel capacity of the locale.
I don't see the prisoner's dilemma aspect to this. If a hotel lowers their prices considerably, they will probably fill up fast. Some of the other hotels may lose some business, and have to lower their prices somewhat, but they will probably not have to lower their prices down to what the "defector" hotel did.
A prisoner's dilemma situation requires good outcome if everyone colludes, and a terrible outcome for all if even a single prisoner defects. I don't see a terrible outcome for all if one hotel greatly reduces their price.
The "terrible outcome" is that if one hotel defects, more are tempted to defect (defect or allow the defector to capture more of the profits), and if all hotels compete on price, everybody's profit margin is lower. If demand is actually greater than supply, prices rise, but if supply is greater than demand, then the possibility of the price collapsing because of defection is greater.
My point was that the period of defection would not last long, because of the high demand; the cheap supply would be gobbled up quick. The hotel prices are the result of organic market forces, not collusion.
"If the supply is not in doubt, but the hotels all raise the prices collectively knowing that the investor meeting is being held, it could be interpreted casually as price gouging."
No, that would be collusion. They would be running a cartel and that would be illegal.
Worse, your speculation that Buffet is doing this to get hotels 'to break rank' is absurd. Metropolitan Omaha has ~10,000 hotel rooms (source - http://www.visitomaha.com/meetings/faqs/#.U0R2_61dUnI) compared to the 30,000 people who plan to visit _just_ for the shareholder's meeting. There is far more demand than there is supply of rooms, this is simply a rational response to that.
I didn't mean to imply collusion as I have no evidence of that. (As an aside, just because it's illegal doesn't mean it's not occuring.) Not sure if my terms are the correct here, but in my mind I was thinking collective != collaborative - in that it's possible to act collectively by exchanging public market information without crossing the line of colluding.
From what I recall, it's illegal for companies to get together and agree not to raise prices, but there's no law preventing them from noticing that their competitors are putting their prices up and raising their own in unison and this is actually quite common.
> An Econ 101 model of the world breaks down in many ways - this is one of them.
Nope, this is exactly what would be predicted by Econ 101: Microeconomics. The demand curve during the shareholders' retreat is shifted up/out relative to a normal one during other weekends, leading to higher prices even given no change to the supply curve.
The situation is like a prisoners dilemma for hotels. If they all raise prices and none of them break rank in price, then they all make more money. BTW, just by pointing out the option of Airbnb, Buffet makes it more likely for a given hotel to break rank in a collective price bump.
Another way for Buffet to break gouging might be to publicly announce the price spikes as something driving consideration of future alternates for his meeting. But his past behavior makes that unlikely given that he would likely have to shift to areas with larger travel markets so as not to be a large percentage of the existing travel capacity of the locale.