AUGUSTA — Looking at price hikes in Augusta during Masters Week provides a crash course in the economic principle of supply and demand.
“There’s only a certain number of restaurant tables that can be filled,” said Simon Medcalfe, associate professor of finance at Georgia Regents University. “There’s only a certain number of hotel rooms that can be filled. The short-term effect is an increase in prices. Over time, we may build more hotels. We may build more restaurants, but that’s going to take several years. It’s not going to be a response within a week.”
With some local hotels increasing rates by as much as 800 percent and rental-car companies tripling daily charges for the week, it’s hard not to notice the extreme change in prices. Whether it be hotels, rental-car centers, restaurants, gas stations or golf clubs, chances are that consumer costs will rise across the board in metro Augusta in response to the Masters Tournament.
The sporting event even has a ripple effect, increasing lodging and transportation prices as far away as Columbia, Lake Oconee, Ga., and Atlanta, said Barry White, president and CEO of the Augusta Convention and Visitors Bureau.
“When there’s major events that take place in communities, typically the demand to be in that community goes up and the prices will also go up,” White said. “That happens across the board from just more traditional vacation destinations. If you’re going to the beach along the Carolina coast, it’s much cheaper to go in February or March as opposed to June or July.
“The fine line is balancing what the market will bear both monetarily and from an image or perception (standpoint),” he said. “We certainly don’t want to be perceived as taking advantage or gouging.”
Hotel rooms across the region are skyrocketing in price for Masters Week.
A Priceline search conducted Thursday of available hotel rooms in Augusta showed limited inventory, with several one-, two- and 21/2-star hotels charging above $300 a night. Comfort Suites on Riverwest Drive had rooms available at $999 per night, while Home2 Suites by Hilton near the Augusta Exchange showed a $800 nightly rate.
Other higher-star hotels, such as the Augusta Marriott at the Convention Center and the Partridge Inn, advertised rates on their Web sites of $660 and from $999 to $1,209, respectively. Those hotels typically range from $92 to $160 on a normal weekend night in April.
Priceline Travel Editor Brian Ek referenced the Super Bowl as another sporting event that brings in big bucks for hoteliers. In 2014, when the event was held at MetLife Stadium in East Rutherford, N.J., hotel rates rose by 93 percent in New York and 56 percent in New Jersey. In 2013, the game in New Orleans led to 143 percent price hikes in the city.
“Hotel rates fluctuate with demand,” Ek said. “And, it doesn’t take a sporting event to do it. New York City hotel rates, for example, typically rise after Thanksgiving when the (Christmas) tree is up and people flock into the city to see the sights and shop.”
During last year’s Masters Tournament, nightly hotel rates averaged at $284 and generated more than $18 million in weekly revenue, according to data provided by STR Inc., a travel-research group that tracks trends in the hotel industry.
Friday, followed closely by Thursday, had the week’s highest average rate of $311.55, bringing in about $2.6 million for area hotels. About a week after the tournament, average nightly rates had dropped back to $64.70, garnering $288,723 in revenue.
The 2014 figures represented a 6 percent rate increase over the 2013 golf tournament.
Local hotels also stayed close to full during last Masters Week. Occupancy rates for the metro area’s 9,200 rooms hovered between 86 and 92 percent for most of the week, dropping into the 70-percent range only twice on each Sunday, according to the STR report.
“When people stop staying in Augusta and start staying an hour down the road and traveling in every day to the tournament, that is not what we want to happen,” White said. “That would definitely be a sign that prices are too high.”
Online searches show that similar to hotel rooms, rental-car rates also spike for Masters Week. Enterprise will charge $152 for a standard car next week versus $42 the following week, while Budget’s standard car rates jump to $166 and fall back to $41 the week after the tournament.
Many businesses contacted for the story did not return messages or did not want to be attributed.
“Prices are really just a signal that provide you with information, and then you adjust your behavior accordingly,” Medcalfe said. “We say in economics, you always have a choice. You can not buy.”
For local restaurateur Walter Clay, raising prices on his menu is an effort to offset extra costs incurred during Masters Week and make a profit.
Clay, who owns Rae’s Coastal Cafe, a longtime fixture in Forest Hills Racquet Club, said his staff undergoes extensive training and works longer shifts for Masters, and he also has to pay more in utilities and food costs. Clay also changes to an all-dinner menu, with dishes such as New Zealand rack of lamb, New York strip, prime rib and fried oysters, and increases portion sizes by about percent to 12 percent per dish.
“The first year that I was open I didn’t increase my prices at all, and the only complaint that I had was it wasn’t enough food,” Clay said. “When I realized that I didn’t make any money Masters Week, what I did the following year is I went up on my portions and increased the prices to offset the portion increase and the labor so that my staff could make money.”
Clay said his Masters Week prices are within $1 or $2 of what restaurants in Atlanta, Greenville, S.C., Columbia and larger cities charge year round.
“We’re fortunate to be in Augusta to be able to pay the prices that we pay all year long,” he said. “I think that’s why it seems like it’s expensive Masters Week is because we get to the enjoy the benefits the rest of the time.”
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