Disclaimer – Any parts of the story that bears resemblance to the real world is purely coincidental.
In a desert kingdom in the far east, there lies a small, bustling town called Arupagnis. Travellers would pass through the town to sun-tan and play in sand dunes. The land provided nothing but sand for miles and miles away.
The Mafia Monopoly (Singapura)
The local mafia runs and owns all the inns in town. At first glance, the daily rates look rather appealing – one night stay at any of the luxury inns costs only $28. However, reading the fine print revealed a glaring detail – the minimum spend (spa, alocohol, restaurants etc) is $2,500 per pax regardless of the duration of stay.
Too expensive? Hey, we’re talking about TripAdvisor’s top ranked, 6-star posh inns, okay? Furthermore, they are all located in the prime district hilariously named Costly Dandy Place (CDP) where the mafia thugs would ensure the safety of all travellers against marauding bandits. However, it must be said that the fearsome bandits haven’t been seen in decades. Travellers had no choice but to pay the hefty prices.
Knight To The Rescue
Years go by without a change, or challenge, to the system. One fine day, a knight in shining armor rode into town. Feeling entrepreneurial after a lifetime of saving damsels and slaying dragons, he decided to retire at Arupagnis and realize his childhood dream of opening an inn.
He was shocked when he found out that all the inns in town are controlled by the evil mafia. Confident that his fighting prowess would be able to deter both the mafia and the bandits, he proudly launched his inn, Shabby Cottage (SC), by charging only $20 per night – with no minimum spend!
Of course, without the backing of the mafia, he couldn’t open his inn in the Costly Dandy Place. Furthermore, with his paper-thin profit margin, our knight in shining armor couldn’t afford to spruce up his inn. No air-conditioning, plus a leaking roof, too. Also, without the backing of the powerful mafia, travellers paying using foreign currencies at Shabby Cottage are forced to transact using inferior rates because our knight has to run over to the nearest money-changer in town every day.
But well, at least it provided shelter and clean water for the poor backpackers who could not afford to stay at the $2,500/night inns.
Governor Legalizes Hourly Rates
In an attempt to boost tourism to the land of endless sand, the governor legalized the practice of charging hourly rates by innkeepers. Shssh – don’t ask me how it helps!
The mafia, being them, refused to budge from their existing 99% monopoly and kept the $2,500 minimum spend in place, even if someone (or two) stay for only one hour. Nevermind, that’s too fast, make that three hours.
Our poor knight, on the contrary, adapted his pricing to the delight of dirt-poor travellers worldwide. Now, he now charges less than a dollar per hour for a short stay! All is good, it seems.
With the addition of hourly rates, even more travellers flocked to the shabby inn operated by our hero, despite the fact that it is poorly maintained with no WIFI and plagued by occasional power trips. They are only going to stay for a few hours, after all. Why pay $2,500?
Going Back On One’s Words
Years flew by, and Shabby Cottage continued to be the toast of travellers who, despite their not-so-fat wallet, could enjoy a vacation in Arupagnis.
Without any warning, everything changed overnight. Early one morning, a notice was being pasted on the front door of Shabby Cottage.
A minimum spend of $1,000 per stay will be imposed at Shabby Cottage with effect from 1st August 2016.
Low budget travellers are shocked, alarmed and angry at such a development! Many of these travellers are regular visitors to the town of Arupagnis and now, they are going to be driven away by the very same knight who had given them years of great hospitality.
For many travellers, they were grateful to the retired knight for providing them with years of priceless memories and of course, cheap accommodation.
For other travellers who are more financially endowed, it wasn’t that much of a pricing issue. Yes, they can easily afford to pay $1,000 for a stay. Yes, Shabby Cottage is still the cheapest accommodation in town. More fundamentally, they are angry because they felt that they have been lied to.
Shabby Cottage had proclaimed to be the only inn in town to carry no minimum spend! It is primarily because of this reason that travellers were willing to put up with the various shortcomings of Shabby Cottage. Overnight, our knight in shining armor is now a mafia-wannabe.
Disrupting Travellers Bahavior
In one fell swoop, what was one single group of travellers has now been split into three, since they are only 3 options that they can take.
Some travellers would grudgingly continue to stay at Shabby Cottage despite the new rule of $1,000 minimum spend. The bottom line is that Shabby Cottage remains the cheapest accommodation in town despite the price increase.
On the other hand, others would no longer be able to afford to visit Arupagnis. Too expensive, they say.
Travellers who became wealthier over the years may now choose to pay more to enjoy 6-star hospitality at the Costly Dandy Place inns. This is looking increasingly attractive to them with the mafia rolling out promotional rates of $1,800 minimum spend per stay for upfront cash payment upon checking in.
A Blessing In Disguise?
A new dawn has descended upon the tourism industry of the bustling town of Arupagnis. And yet, who knows? This latest development could be a blessing in disguise. By singlehandedly alienating a huge number of travellers who could not or would not succumb to the mafia monopoly, there is now a vast pool of budget travellers waiting to give their support to a new innkeeper who can live up to the broken promise they were promised before.
With the incumbent severely weakened, a massive barrier to entry has been lifted for a new inn to join the fray and establish a foothold in Arupagnis.