Tab for 2011 Berkshire Meeting

Markets are a meeting of supply and demand. I recently got a jolt to learn that the only rooms left in Omaha for this year’s Berkshire meeting are at the Holiday Inn Downtown Omaha. This hotel has a bar and a swimming pool, but no restaurant, room service, or fitness facility. That would be okay at the Holiday Inn’s “normal” rate, which at $176 including taxes and fees is reasonable for a one-night stay in a mid-priced hotel without many amenities.

But the Holiday Inn is charging more than double that for Berkshire weekend.

The hotel is requiring a minimum three-night stay with onerous cancellation terms, and the price is stratospheric -- $349 per night or $412.18 including taxes and fees. This means a three-day stay during the meeting will set you back $1,236. Any other time of year your hotel bill would run $528 -- a difference of $708, more than enough to pay for airfare for two from either New York or Los Angeles. And that's being generous. Most people do not need three nights and would arrive on Friday, leave on Sunday, and pay only $352 total.

The extra $884 ($1,236 minus $352) may be worth it for a considerable number of people. You are paying for the authentic experience. Seeing Buffett live is not the same as seeing him on television. Rubbing shoulders with a crowd of like-minded people, participating in the energy of the event, dropping into the barbecue, the cocktails at Borsheim's,  shopping -- it's a unique experience.

The Berkshire meeting, while unique in character, is not unique in size. The popularity of Buffett and Munger attracts 40,000 people. Yet there are plenty of other huge events that don’t create a bottleneck. For example, the Consumer Electronics Show in Las Vegas attracts 113,000 people. The World of Concrete trade show had 70,000 attendees last year.

The problem with the Berkshire meeting is supply, not demand, and the result is price-gouging.

Price-gouging occurs when somebody collects "excess" profits because of a temporary shortage in supply of something – especially food, clothing, or shelter. Usually, price-gouging occurs in an emergency. The hotels of Omaha have a whole year to plan their price-gouging in advance.

The Holiday Inn Downtown is the only hotel left with rooms, but it’s far from the only culprit. Fortune editor Carol Loomis was seen at the front desk of the Marriott Regency this year, her voice raised in outrage, protesting the new policies for 2011 and saying that she would complain to Buffett.

I don’t know that he would have any influence, especially in this rotten economy. These hotel chains are not locally owned. The citizens of Omaha are not the ones who are doing the price gouging. In fact, they are victims like everyone else, because if their friends and relatives attend the meeting, they’re going to get gouged too.

 * (Please note I have updated to include the actual taxes and fees from the Holiday Inn, as billed. These were *higher* than my estimate -- 16% -- it's useful to keep in mind that these "shrouded" costs turn a $349 quoted rate into $412.)