Brian Bonner writes: Free, competitive enterprise means finding market price
For more than 20 years, the West has been lecturing Ukraine on the market economy, the laws of supply and demand and the need for businesses to be profitable and to reinvest.
So it was with bemusement that I read the hysterical recent stories emanating from Western capitals expressing outrage that airlines, hotels operators, restaurateurs, taxi drivers and others in Ukraine might actually try to cash in during the three weeks this summer that Euro 2012 football matches will be held in Kyiv, Kharkiv, Lviv and Donetsk.
The London Telegraph on March 8 published a story headlined “Ukraine hotels trying to rip off England fans, warns UEFA.” (UEFA stands for the Union of European Football Associations, the tournament’s organizers).
“Rip off” is repeated in the subhead, and a UEFA official interviewed admits that the organization is pressuring the Ukrainian government to pressure hotels to lower prices.
I mean, c’mon, this is the long-awaited chance for struggling businesses (and there are plenty of them) to make a little extra money. This profit motive should be praised, not condemned.
These are all areas where the consumer does have a choice. It doesn’t take long for an enterprising visitor – even one who speaks no Ukrainian or Russian – to do his or her homework to find out the right local prices to pay.
This is the way capitalism works as long as there are no monopolies or barriers to competition, right?
I spend little time in London because I can’t afford even their normal rates. But when I am forced to stay there for an airport layover or for business reasons, the British don’t give me a break in price. From the taxi, to the restaurant to the hotel, I must pay the required amount. There’s usually no negotiating, unlike in Ukraine. There’s certainly no newspaper stories headlined: “England is ripping off visiting American tourist.”
Back in my home state, we have the Minnesota State Fair. For peculiar cultural reasons, this event is wildly popular – drawing 1.8 million visitors during its 10-day run in a state with only 5 million people.
The State Fair is a non-stop outdoor street party, concert and carnival all rolled into one celebration to mark the end of summer.
Those lucky merchants with a coveted vendor license can make a bundle of money during the fair, by charging $10 for a cup of beer and other ridiculous prices.
Residents who live in the area even make money by renting out their front lawns for parking.
A fair visitor can easily spend $200 in a single day.
The same pricing formula is applied at baseball games, auto repair shops, tourist resorts and almost everywhere else – what the competitive market will bear. And it should be the same for Euro 2012.
If Ukraine has a shortage of affordable hotels, taxis and restaurants, the best cure is for the existing ones to make so much money that other entrepreneurs will find it worthwhile to go into business and increase the pool of competitors.
Consumers are discerning. If I get ripped off by a place, I never return.
Those business owners and taxi drivers who are in business for the long run will find the right prices to charge.
Those who insist on jacking up their prices unreasonably may find themselves with no customers to gouge, as hotels and restaurants sit empty, and the taxi driver sits parked on the side of the street, reading his newspaper.
If you don’t want to pay the price, it’s simple. Don’t come to Euro 2012, foreigners, watch the games on TV. It’s only a soccer tournament.
Kyiv Post chief editor Brian Bonner can be reached at [email protected].
Gouging customers will do serious harm to image
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Mark Rachkevych writes: My advice is to source the best drug you can.
Ukraine will soon add the word “greedy” to descriptions of the nation as corrupt, a haven for sex tourists, draconian in squeezing political opponents and inhumane in its treatment of homeless dogs.
Now it looks like the bottomless reservoir of patience for Ukraine is finally running out within the Union of European Football Associations, Europe’s top soccer governing body.
UEFA, the Switzerland based non-profit organization, and the continent’s media outlets are teaming up to complain about exorbitant hotel rates for Euro 2012 football fans during this summer’s matches.
Ukraine’s Euro 2012 honcho, Deputy Prime Minister Borys Kolesnikov, agreed and complained in a report published on Ukraine’s official Euro 2012 website about “extortionate” hotel rates.
According to a report published this month in The Telegraph, a London newspaper, a one-star hotel in Donetsk was found to be charging some $1,500 a night on June 11, when England faces France.
“Poverty gives rise to greed. In our time we exempted hotels from taxes for 10 years, looking forward to their loyalty,” Kolesnikov said. “But now we have this kind of response.”
This covetous, myopic approach is ruinous for the accommodation sector’s long-term business (and for the country’s tarnished image). It is discouraging potential first-time visitors who fear getting fleeced.
This suicidal, below-the-belt business practice is targeting people for whom Ukraine is “somewhere in Russia,” that is, the kind of people you’d want to win over for a return visit. It’s beyond greed, it’s lecherous.
I could just imagine the Swedes or the Dutch, soccer fans who usually travel in family units, booking fewer rooms or campsites because they had to leave their spouses and children behind.
Much of Europe is in austerity mode. The Greeks, Portuguese, Italians and Spaniards are in the worst economic shape. Not far behind is the Republic of Ireland, which has received the largest International Monetary Fund bailout in Europe.
But to Ukrainian hoteliers, pub proprietors and taxi drivers, they’re all the same: Hard currency-carrying chumps to suck dry for three weeks, not valued tourists who just might “turn on Ukraine” again.
“It’s important…that hotels accept the principle that they will maximize their…returns by having moderate-price levels that will not put potential guests off…not impose onerous terms and conditions…such as enforcement of minimum overnight stays,” reads UEFA’s Euro 2012 bid requirements.
Yet this is precisely what hoteliers and other hospitality service providers are doing. Because they’re blinded by the “milk’em dry” mentality, they’re ignorantly damaging their long-term financial health.
As it is, service is bad in Ukraine. It’s demeaning having to shell out big money just to be treated by rude hotel receptionists who don’t know what express check-in is.
You, not they, have to complete Soviet-era registration slips as they discourteously greet you with monosyllabic grunts or just a plain scowl….or being neglected by servers at pubs who you know that they know (this is how cynical it gets) that you walked in, yet don’t bother to acknowledge you in polite body language.
I sincerely fear what awaits foreigners in June, when the games begin – “pizza with fungus” (instead of mushroom pizza) listed on badly translated menus and 20-minute waits for menus or a beer refill – yes, that’s nearly a quarter of a soccer game’s duration.
And a cab ride? The price from Podil to Khreshchatyk Street won’t be Hr 40, it’ll be 40 euros. Welcome to Ukraine, sucker.
Kyiv Post staff writer Mark Rachkevych can be reached at [email protected].
