Hotel customers tolerate these marked-up amenities because they generally aren’t very interested in driving a hard bargain. The business traveler is likely to feel that he “needs” appropriately located accommodations and isn’t going to be interested in exhaustive research about the costs and benefits of staying someplace cheaper and more remote. What’s more, he’s generally not paying out of pocket. A responsible employee will of course try to be reasonably frugal, but even so frugality is benchmarked to local costs. That encourages a market that’s biased toward higher price points. The existence of premium business travelers who can fully pass on costs on to clients (think fancy lawyers and consultants) further pushes the market up. What’s more, even when people do pay for their own work travel, the cost is tax deductible. If a journalist travels for a freelance assignment or speaking engagement, it makes sense to take extra consumption in the form of staying in a nicer hotel with pre-tax dollars than to spend after-tax dollars at home.
Tourists may be more frugal. But even so, for many vacationers (especially in America) time is in shorter supply than money, so it makes sense to invest extra money in ensuring that the time is well spent.
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