Revenue Management Ethics in Crisis
- 4 days ago
- 4 min read
Setting Guardrails When Localized Demand Surges Create Pricing Temptation
When a media organization calls needing fifteen rooms for correspondents at short notice, when an NGO deploys a team of forty for three months, when evacuees need immediate shelter, the temptation to price gouge is real. Resist it.
This article addresses a topic that many in the industry are uncomfortable discussing openly: the ethics of pricing during a crisis. At Global Asset Solutions, we believe that asset managers have a responsibility to set explicit guardrails on revenue management during conflict periods, and that doing so is not just morally correct but commercially intelligent.
The Commercial Case Against Gouging
Charging three times rack rate to a journalist who has no alternative feels like a win today. It is a loss tomorrow. That journalist will file a story. Their bureau chief will remember the rate when planning the next deployment. The NGO procurement officer will note it in their evaluation for future regional operations. The evacuee will tell their network. In a world of transparent reviews, social media amplification, and institutional procurement databases, short-term price extraction destroys long-term relationships and brand equity with remarkable efficiency.
The precedent from COVID is instructive. Hotels that offered healthcare workers discounted or complimentary rooms generated enormous goodwill that translated into booking preference for years afterward. Marriott and Hilton both ran frontline-worker accommodation programs in partnership with American Express that cost relatively little and generated reputational capital that is still paying dividends. The properties that instead raised rates during peak lockdown demand (particularly in markets where quarantine housing was required) faced backlash that damaged their standing with corporate travel managers and government procurement offices.
The Framework: Premium Yes, Gouge No
Asset managers should establish explicit revenue management guardrails for the conflict period. Here is the framework we recommend:
Demonstrate tangible value. If you charge a premium, justify it with enhanced services that the guest can see and experience: dedicated floor with controlled access, guaranteed high-speed connectivity, flexible cancellation, enhanced F&B packages, or daily wellness amenities. The guest should feel they are paying for real value, not simply for their lack of alternatives.
Separate rate structures by channel. Institutional rates (NGOs, government, media) should be managed through direct contracts, not published on OTAs where they anchor future pricing. This protects rate integrity for the recovery while serving conflict-specific demand at fair, competitive prices.
Set a conflict-period rate ceiling. Agree between owner and operator on a maximum ADR increase above the pre-conflict rate card for walk-in transient demand. This prevents individual revenue managers from making short-sighted decisions under pressure, and it provides a clear reference point that can be communicated to staff.
Invest the margin in quality. Any premium charged during the conflict period should be demonstrably reinvested in service quality, security measures, and guest experience. The guest should feel the value, not just pay it. This is the difference between premium pricing and exploitation.
Premium pricing during a crisis is justifiable when it reflects genuine, tangible value delivered to the guest. It becomes gouging the moment it reflects nothing more than the guest's lack of alternatives. Your reputation will outlast this conflict. Price accordingly.
Establishing and enforcing revenue management guardrails requires a party at the table whose incentive is aligned with the asset’s long-term reputation, not the current month’s RevPAR index. Operators’ revenue management systems are optimized for yield. They are not optimized for reputational risk. The asset manager provides the counterweight: ensuring that rate decisions made during the crisis do not create commercial liabilities that outlast it.
The Reputational Asymmetry
In hospitality, positive reputation takes years to build and seconds to destroy. A single viral social media post from a gouged evacuee will undo months of careful brand building. The images of stranded guests in hotel parking lots already circulating have created a narrative about how the industry responds to crisis. Every property is, whether it intends to or not, writing the next chapter of that narrative with every rate decision it makes this week.
Conversely, a single act of restraint or generosity (housing displaced families at cost, offering meeting space to humanitarian coordinators, providing complimentary meals to stranded travellers) generates stories that circulate for years and build the kind of institutional goodwill that money cannot buy. The reputational return on restraint during a crisis is profoundly asymmetric. Restraint costs you modest short-term revenue. Gouging costs you long-term trust. The math is clear.
Adnan Shamim
Managing Partner, Middle East & Africa
Leanne Reddie
Chief Commercial Officer
QUESTIONS FOR YOUR NEXT OWNERS' MEETING
1. Has your revenue management team established a conflict-period rate ceiling, agreed between owner and operator?
2. Are institutional and government rates managed through direct contracts invisible to consumer OTAs?
3. Can you articulate, specifically, what additional value justifies any premium you are currently charging?
4. Are you tracking your hotel's online reputation sentiment during the conflict? What story is being told?
5. Have you identified opportunities for goodwill gestures (evacuee accommodation, community meals, first responder support) that build long-term reputational capital?
In Phase 4, we turn to the structural question that underpins everything in this series: who is actually representing the owner’s interest through these decisions? Article 12 makes the case for specialist, hands-on hotel asset management as the discipline that ties every preceding framework together. Articles 13 and 14 then address the operational checklist and the emerging resilience of branded residences.
