New Times Square with New Economy
By Madhuri Podugu
After a long time, we all made it to our new year, 2017! But if we rewind our memories to New Year’s Eve weekend, we should be realizing that we spent most of the day by counting hours and minutes. In fact, it could be the only day of the year when we take the time to count!. It was also the day when New York City became host to the world’s premiere New Year’s Eve celebrations, with festive ways, including the Rockin Eve’ performances and the iconic ball drop in Times Square. Each place like New Year’s Eve Wishing Wall and Madame Tussauds, showed their uniqueness to impress the expectant visitors and New Yorkers. So altogether, Times Square is a dynamic place, filled with fantasies, but is it true for retailers at Times Square? Of course, many companies gain a lot of profits but are they gaining in a right way?
Even though Times Square comprises only 0.1% of New York City’s total land area, its Alliance reports shows that it is responsible for generating $110 billion revenue for the city. Tim Tompkins, President of the Times Square Alliance, said that, “ While finance, insurance, and banking markets contracted, slowing the City’s economy overall, the growth in areas like entertainment, hospitality and tourism reminds us of the value of investing in the travel and tourism sectors”. Time Square supports a total of 385,000 jobs and during New Year's Eve, it gives a great opportunity for companies to hire more jobs, so that they could expand their capacity for customers. On the other side, companies and restaurants take the advantage of this opportunity and price discriminate their products. It can be seen through a regular weeknight restaurant, Olive Garden, charged $400 per person for a buffet and a DJ. Hotel Marriott charged a small guest room starting from $999 and charged the New Year’s Eve seating for $3000. Retailers like Olive Garden, intentionally modified their original product and convinced many consumers on the fact that their product/deal is the best one. There would be no decrease in demand for these companies because they know that many people are willing to pay their high price. In addition, Times Square retailers start to derive popularity before New Year’s Eve, through hundreds of daily advertisements on pedestrians passing through the square. These advertisements not only evoke consumers to attend the New Year’s Eve but they indirectly generate revenue for the city and the retailers.
Since, we know what really the Times Square looks like. If you are planning to attend next New Year’s Eve, think about how much money you are going to save and how much you are going to give up to enjoy the bustling celebration?
Happy New Year!
Works Cited
"NYC & COMPANY INVITES VISITORS TO RING IN THE NEW YEAR IN NEW YORK CITY." Nycgo.com. Web. 26 Dec. 2016.
Network, Mary Bowerman. "Olive Garden in Times Square Charging $400 for New Year's Eve Tickets." USA Today. Gannett Satellite Information Network, 29 Dec. 2015. Web. 26 Dec. 2016.
"New Report on Economic Impact of Times Square Finds District a Steady Growth Engine for NYC." Times Square Alliance : New Report on Economic Impact of Times Square Finds District a Steady Growth Engine for NYC. Web. 26 Dec. 2016.
"New York Marriott Marquis." Hotels In Times Square For New Year's Eve | Marriott. Web. 26 Dec. 2016.
The points of price discrimination you have made are very true. Companies try and do take advantage of events and greatly increase their prices because they can. This tactic, especially in hotel pricing, can be seen all over the world because as soon as the demand increases for a room because of an event, the prices are able to increase. Although this is strategy of almost doubling prices is immoral it is still a smart tactic for these businesses.
ReplyDeleteWhile most people get excited to celebrate on New Year’s Eve for the coming year, I usually spend it lying low and curled up in my bed. I find it interesting that many people have it on their bucket list to travel to Times Square in New York to watch the the crystal ball drop. To me, the opportunity cost would be time spent laying in bed in return for being squashed by people in the crowded streets. In the blog post I found it interesting that the demand for goods and services, like the Olive Garden example, did not decrease, even with raised prices. I guess it makes sense for the businesses to raise their prices because people want to live their life long bucket list dream and be in Times Square celebrating. Overall, I would never spend the amount of money some people do to be in New York to watch the ball drop, however for many, it is a lifelong dream.
ReplyDeleteThis is an interesting topic. I agree with the fact that people who stay in New York around the New Years time are willing to pay the high prices that the hotels cost them because it might be a once in a life time experience. Also, I'm sure that all the hotels in the New York area also raise their prices because they can charge more and people will still pay. It is the job of the guests that will be attending the big New Years parties and staying in the hotels to find the cheapest deal.
ReplyDeleteAlthough it seems a little outrageous that companies raise their prices so much when they know the demand for their good is increasing for an event, it definitely does not surprise me. They know that the demand is going to be very high, and they know that the surrounding businesses are going to be raising their prices as well. This means that there will not be many cheap options, so the consumers are going to pick a place to go that the believe maximizes their enjoyment for the experience that they will have.
ReplyDeleteI was really amazed by the Olive Garden fact! Where did you find this fact? The hotel prices are also insane, but not as shocking. It doesn't surprise me that people are spending so much money for one night; however, I find NYE at Time Square not great enough for the price. Everyone is squished, freezing, and standing in the streets for hours in the one spot they hope not to lose. Although there are always pop stars performing, I think I would rather pay money for a concert where I have a guaranteed seat. These people are facing huge opportunity costs, for $1000+ can buy you a vacation to a warm island, pay off your rent for the month, or pay for a few months groceries. I understand that people see going to Time Square on NYE is somewhat of an American tradition, but it is also a ridiculous one. I hope they enjoy their hundred dollar Olive Garden dish.
ReplyDeleteI do agree that it's crazy how people will pay so much money to go to Times Square just to say they were there for New Years. The companies in this area definitely know what they're doing; even though their prices are incredibly high around New Years, they know that their customers will be willing to pay that price anyways so they continue to charge it. As far as making the trip out to NYC goes, I think it would be really cool to say you spent New Years in Times Square, but only once. Trying to go back every year would really cost your wallet a lot more than the experience is worth.
ReplyDeleteI don't think it is wrong for businesses in the area to charge higher prices. People who go there during this time don't go for a mediocre stay, but go because it may be a once in a lifetime opportunity. Businesses take this into account and formulate high prices that people won't care to regard during this time of year.
ReplyDeleteThere is a tremendous opportunity cost associated with going to Times Square on New Year’s Eve. Even for those who go there one time in their life, it has quite the cost to it. The supply (number) of people who go to Times Square increases every year, and that naturally increases the demand for all sorts of products (restaurants, hotels, etc). This is positive economic growth for businesses in that area that allow them to profit from each year New Year’s Eve festivities. Since the prices they charge are majorly increased for this event, businesses notice a major producer surplus since the consumers will be paying much more than what they normally would for that same item. Is it right, probably not, but if people will purchase something for a high price than the producer should sell it at that price.
ReplyDeleteThis is very interesting regarding the New York Times area. The facts really paint a picture. It is only .01% of the land space of new York. However it brings in an insane amount of money. As well as surrounding businesses like average places like olive garden were charging $400 for a buffet. This seems crazy but very interesting as well as the hotel charging 3 grand for seating. The facts made the article very well written and an interesting read.
ReplyDeleteIt is interesting how much total revenue Times Square, alone, takes in. I can see why many shops, restaurants, and hotels would price discriminate, as tourists have a higher willingness to pay, which would cause them to pay more for "normal" goods or services. Many people go to Times Square for NYE, but they are most likely aware of the costs they have to make, whether it's through the food they eat, or the places they stay.
ReplyDeleteI never realized how small Times Square was relative to New York City, so being as small as it is, there are only so many businesses that can fit into the area. During New Year's Eve, these businesses are in high demand. While watching the New Year's Rockin' Eve on TV, some of the people in attendance were interviewed and asked how long they have been in Times Square; many of them answered "all day". People do not want to risk losing their good spots that they have saved for concerts and other events during the day, so they are not going to leave the square for things such as food. This puts the businesses in the surrounding area in high demand. Since there is such a high demand, they are able to raise their prices, because no matter how high the price, people will spend the money because really they have no other options. New Year's Eve is for sure a big day for businesses in the Times Square area.
ReplyDeleteSpecifically New Years Eve in Times Square, is a day or more event as people flood the area for a prime spot to watch the ball drop, concerts, and other events. I am not surprised that businesses in the area utilize price discrimination - even small souvenir stands and things of that nature utilize techniques like bartering to squeeze as much money as possible out of consumers (largely tourists unaccustomed to the New York lifestyle). However, I was very surprised at the amount of price increases. I have always wanted to be in New York to witness and be a part of the New Year's celebration, but the cost might outweigh the benefit of my future attendance.
ReplyDeleteThe simple truth is that business know that there is a greater demand for their products or services on New Year's, so they can raise their prices to compensate for that. In the end, businesses are able to make large economic and accounting profits on New Year's because demand is much higher than it normally is. Because it is only a short term change, firms do not enter the industry because it doesn't sustain in the long run. After New Year's, these businesses go back to equilibrium when demand returns to normal levels.
ReplyDeleteI agree about your points on price discrimination. Those businesses know what they are doing because they know that in the holiday season people are willing to pay a bit more than they usually would throughout the year. I found it very interesting about how high the prices are for 1 night in a hotel room in NYC during New Years. This isn't surprising because it has become a bucket list item for many people throughout the US. Although there is a huge opportunity cost people take into consideration. Some people could be spending time in the comfort of their own homes or they could choose to stand outside for hours in the cold watching Mariah Carey fail to lip sync.
ReplyDeleteMany restaurants, hotels, and retail stores make a lot of their profit from customers around New Years Eve. Since the holiday draws in millions of people from all around the world, stores and companies must adjust their prices and supply to accommodate the customers. Hotels usually charge more for that certain night, and restaurants stock up on food. I agree with your statement about price discrimination because that happens in many areas on holidays, since companies know customers are willing to spend money. For example, I would choose to spend money to go to NYC for New Years Eve just because it is such an exciting opportunity to be surrounded by people from all over the world while welcoming a new year. The overall demand for many things during the holidays skyrockets, especially in such a cosmopolitan, tourist-heavy area like Times Square.
ReplyDeleteNew York City is know to overprice consumers. Whether it’s Christmas weekend or an average day, their prices are extremely high. Clearly since New Year's Eve brings a lot of tourist looking for the classic new year’s festivities, businesses, are going to raise their prices even more because people need to eat and they are going to need a place to stay, it’s in businesses best interests to gain a profit, and by upcharging consumers, they are able to do so. Although attending New York during new year’s would be a dream come true, is it really worth it? I agree with you that people should second guess this option before going full in. It’s not only a unique experience, but a pricy one, so pricy that it might not be the best option depending people’s finance. Overall, New York is able to take advantage of this holiday for their own benefits.
ReplyDeleteDue to the popularity of being in Times Square on New Years Eve it is easy to understand why there is so much profit. However, with the steep increase of prices at the restaurants and hotels that are located in the area, I believe there would be a drastic decrease in quantity demanded. A lot of people would arrange other plans in terms of eating and sleeping when the prices are that high. I think that less people would be willing to spend that much just for the special occasion. However, having people that will pay the increased prices will definitely benefit the New York economy and makes it easy to understand why Times Square brings in so much revenue. If prices were only slightly increased I think that the companies profits would be higher because the quantity demanded would increase and therefore more products would be sold. Yet I doubt they will ever lower them since there are people who choose to spend the excessive amounts.
ReplyDeleteI didn't even know that it was that expensive, for me I thought it was less than that but that s just because I haven't gone to any other places outside of Wisconsin besides Indiana and Chicago. I guess it make sense though for the companies to rise their prices around this time of the year because they know they'll be making a lot of money since there's going to be a lot of people going there for New Year. I think people would be willing to spend that much money though because it only happens once a year, and those people are mostly from outside of the states. Overall this is great topic, I didn't even think how much it would be just to celebrate New Year and how it means a lot to people but now I know.
ReplyDeleteWhen reading this post I was surprised that places like the Olive Garden increase their prices during the holidays. I see why they do it since it gives them the opportunity to make more along with price discriminate their products. I know that I wouldn’t want to spend more during the holidays especially since there are places that have sales. Although I have been to New York and know that things are pricer there and typically when people are on vacation they tend to spend more money.
ReplyDeleteWhile reading through this blog post I was not incredibly surprised with the change in costs for all of the business in Time Square during New Years. These retailers took into account how this is Time Square's most anticipated event and people from all around the world fly in to watch the "Ball Drop" at midnight. This is a smart move on these retailers however this may impact the amount of people that attend this event. So in the end they will probably end up making the same money that they would on any normal night since they may lose business to those high prices. Since I have been to New York I understand that the price of living is higher than the price of living here in Wisconsin. So, I have an advantage to traveling there during this time.
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