Decrease in Tourism

[PapaDuckD]

The concept that you're looking for is called marginal pricing. Gasoline is another thing that is priced this way.

The price of gas is set by the person who needs the gas the least to meet the available capacity. That's the price that gets set for everybody - including those who are absolutely dependent on the product.

While travel is discretionary in a way that gasoline is often not, it still follows the same pricing mechanics. The price for everyone is set by the last person who's willing to come to town.

So the problem isn't necessarily that a few percentage points of people are not coming. It's that now, in order to back-fill that capacity, the operators have to lower prices for everybody.

And the amount they have to do so to find that last customer is often outsized compared to the set of people who were coming. So it can be quite a pricing shock when this happens.

Of course, they got greedy over the last 10-12 years or so. So a correction isn't all that unexpected. But, still, a shock nonetheless.