PR - Crisis and Management

Tuesday, February 21, 2006

Price gouging after Katrina

Hurricane Katrina was the nation's costliesr natural disater in history. It will be months, or even years , before the cost of Hurricane Katrina is fully known, estimates agree losses will far exceed $100 billion. While the total costs of the tradegy aren't known, recent reports have found that the government might be paying more than needed.

After the hurricane, there were hundreds of thousands of Katrina evacuees living in temporary shelters and/or trailer parks set up by FEMA and other relief organizations in the first months after the disaster hit. Other evacuees were put up in hotels all around the country. Recent reports show there may have been fraudulent behavior on the behalf of several hotels which became a second home to evacuees.

The Federal Emergency Management Agency paid hotels around the country to house evacuees. FEMA paid anywhere from $375-$438 a night in cities such as New York City and Chicago, only to later find that those were not the going rates for the hotel rooms. All in all, FEMA rented 773 rooms for more than $150 a night at a total cost of $147, 935. Congressional committee testimony that luxury hotels billed the federal government up to $438 a night for evacuees raised the prospect of a potential price-gouging investigation.

Official from the hotels involved claim that the rates were accurate because the hotels were high season and they didn't know how long the evacuees would be staying. Several hotels didn't return calls seeking comments on the issue. In terms of public relations, this story is negative PR for all of the hotels involved because they will be viewed as taking advantage of an emergency situation involving innocent victims.


Blogger Deniece said...
might be useful

8:33 PM  

Post a Comment

<< Home