At this year’s annual meeting of health-care executives and investors in San Francisco, an industry criticized over the high prices of its drugs got a taste of its own medicine.
The four-day J.P. Morgan Healthcare Conference, known more for speed-date meetings and deals than actual presentations, this year packed thousands of investors, bankers and executives into the rain-soaked Union Square neighborhood. Hotels filled a year in advance, and left unsightly scars on company expense reports. The most modest charged a few hundred a night. The swankiest went for thousands. Some even charged people for sitting.
At the Holiday Inn Civic Center, about a mile from the conference site, a single-bed room cost $499 plus tax on Sunday and rose to $599 the next two nights. On Monday and Tuesday, a room with one king bed at Hotel Kabuki, a boutique joint more than a mile from the action, was $479 a night. By Friday, a day after the conference, you could rest your head in a similar room there for less than $200.
“Everyone’s out there looking to make a dollar off the crowd,” said David Schull, president of New York communications firm Russo Partners LLC and a 12-year veteran of the confab. “I can’t think of another health-care conference where I’ve seen this. It’s absurd.”
As costs have risen every year at the three-decade-old gathering, companies have become creative, he said. His firm rented two townhouses through a timeshare program for his staff and clients. Some companies have resorted to houseboats.
The JW Marriott was asking a $100 minimum to hang out in a roped-off third-floor lobby outside a lounge. You could bring three friends inside the lounge for a discount if you spent at least $175 in food and drink per hour. One investor fled with a cup of coffee, telling a colleague, “They were going to charge me just to sit at the bar to drink this.”
Econ 101 and the laws of supply and demand explain it. Big drug companies rent out entire floors of hotels for meetings where executives hole up with catered lunches and conduct daylong sessions with investors, potential deal partners and possible acquisition targets. Hotels replace beds with collapsible tables and lay on snacks, bottled water and liquor. Hence, the price of a good night’s sleep goes up.
The rain also made it rain for car services as executives were denied a nice, dry walk. Uber and Lyft were busy, and surge pricing reflected it. On Tuesday, a driver told a Bloomberg reporter that he had thought the sixfold increase in his rates meant the Lyft app was broken. Turns out he was just having a good night.
E-mails sent to Marriott International Inc., InterContinental Hotels Group Plc, which owns the Holiday Inn brand, and the Joie de Vivre chain, which operates Hotel Kabuki, weren’t immediately returned after business hours on Friday.
Hotels for years have used management programs similar to those of airlines, sending prices up during times of high demand, said Ted Mandigo, a hotel consultant with TR Mandigo & Co. in Chicago.
“There are fine lines between maximizing revenue and taking advantage of a situation to the extreme,” he said. “Unless it’s something really unique, a $500-a-night Holiday Inn is certainly maximizing the revenue during a peak-demand period.”
Book now if you want a place to crash next year. Rates for a king-bed room at the Westin St. Francis are about $2,500 a night for Jan. 7 to Jan. 11, 2018, according to the hotel’s website on Friday.
With assistance from Caroline Chen. To contact the reporters on this story: Jared S. Hopkins in New York at [email protected], Robert Langreth in New York at [email protected] To contact the editors responsible for this story: Drew Armstrong at [email protected], David Gillen at [email protected], Stephen Merelman, Stephen West.
©2017 Bloomberg L.P. This article was written by Jared S. Hopkins and Robert Langreth from Bloomberg and was legally licensed through the NewsCred publisher network.