The Economics of Oasis Mania: Why Hotel Prices Are Skyrocketing

The reunion of Oasis, one of the UK’s most iconic rock bands, has sparked a surge of excitement among fans. The Gallagher brothers are set to perform in several cities across the UK and Ireland from July 4 to August 17, 2025. However, this anticipation comes at a cost—quite literally. Fans are outraged as hotel prices near the concert venues have quadrupled or more, with accusations of price gouging flying around.

The Law of Supply and Demand in Action

Whenever there's an event like an Oasis reunion concert, the demand for nearby accommodation skyrockets. Hotels, aware of this surge in demand, adjust their prices accordingly. This practice is known as dynamic pricing—a strategy where prices are changed in real-time based on current market demand. With thousands of fans desperate to attend these once-in-a-lifetime concerts, the demand for hotel rooms exceeds supply, especially since hotels have a limited capacity.

Is This Price Gouging or Profit Maximisation?

Accusations of price gouging have surfaced as fans notice that the cost of rooms near concert venues has jumped drastically. Price gouging typically refers to raising prices to an unfair level, especially during a crisis or when consumers have little choice. However, from an economic standpoint, what we're witnessing here might not strictly be price gouging but rather profit maximisation. This concept explains that businesses aim to maximise their profits by setting prices where marginal costs equal marginal revenue. When demand spikes dramatically, as it has for these concerts, higher prices can reflect the market’s willingness to pay.

The Role of Price Elasticity of Demand

How much a consumer is willing to pay depends on the price elasticity of demand. If a product is price inelastic, meaning demand doesn't change much with price, businesses have more leeway to raise prices without significantly affecting sales. For many Oasis fans, attending a reunion concert is a dream, and they may perceive the opportunity as nearly priceless. Thus, even with higher hotel prices, demand remains robust. This inelasticity allows hotels to push prices up without losing too many bookings.

Consumer Surplus: What’s at Stake?

The rapid rise in hotel prices significantly impacts consumer surplus—the difference between what consumers are willing to pay and what they actually pay. In this case, fans are forced to pay much more than they might have anticipated. For example, some fans reported booking rooms initially for around £179, only to see the prices jump to over £900 after their bookings were cancelled and re-listed. This reduction in consumer surplus leaves many fans feeling exploited, believing that hotels are unfairly capitalising on the event.

The Profit Motive: A Double-Edged Sword?

The profit motive drives businesses to seek higher profits, but it can also lead to questionable practices. Many fans have accused hotels of cancelling bookings under the guise of "technical errors" only to relist them at much higher prices. Such behaviour, while arguably in pursuit of higher profits, has raised ethical concerns and prompted public backlash.

Glossary of Key Economic Terms

• Consumer Surplus: The difference between the amount consumers are willing to pay for a good or service and the amount they actually pay.
• Dynamic Pricing: A pricing strategy where prices are adjusted in real-time based on current demand, competition, and other external factors.
• Limited Capacity: The maximum output or service level that a business or venue can provide, constrained by physical or operational limits.
• Price Elasticity of Demand: A measure of how much the quantity demanded of a good responds to a change in its price.
• Price Gouging: Raising prices to unfair or exploitative levels, especially during emergencies or when consumers have limited alternatives.
• Profit Maximisation: The process by which a business determines the price and production level that returns the greatest profit.
• Profit Motive: The incentive that drives individuals or businesses to increase their financial gain through their actions or decisions.

Retrieval Questions for A-Level Students

1. What is dynamic pricing, and how does it apply to the hotel industry during the Oasis concert period?
2. How does the concept of price elasticity of demand help explain why hotels can significantly raise their prices for certain events?
3. Define consumer surplus and explain how it is affected by the increase in hotel prices near the concert venues.
4. Why might hotels be accused of price gouging, and what economic arguments might justify their pricing strategies?
5. Discuss the role of profit maximisation in the context of the hotel price increases seen before the Oasis concerts.