The famous hotel located in downtown Paris, Hôtel de Crillon, will be closing its doors for two years for a major renovation. Before they close however, the hotel will be auctioning off over three thousand of items from the hotel. Examples of items for sale include a couch that is priced at 2000 euros or about $3000, and a single bottle of wine that is priced at 7000 euros, or a little over $9000.
Understanding this auction from a supply and demand point of view sheds light on these outrageous prices. First of all, the Hôtel de Crillon is one of the most famous hotels in all of France. The hotel housed guests from Theodore Roosevelt to Madonna to Bill Clinton. The demand for these items is extremely high because of the great history and luxury of the hotel. In addition, most of these items are of a select few, meaning that there is a very, very limited supply of items to be sold. Both the high demand and low supply leads to extremely high prices, as seen in the couch and the bottle of wine.
In addition, GDP may be effected by this major renovation. There will definitely be an increase in investment because the hotel company will be spending millions of dollars to pay renovation companies to rebuild the hotel. At the conclusion of construction, consumption will increase because hundreds of people will be staying at the hotel spending money. Finally, net exports will also increase because of an increase in exports. I believe that people will travel to Paris from outside the country simply to see or to stay at the timeless hotel. Overall, I would expect an increase in GDP.
Article: http://www.france24.com/en/20130414-crillon-hotel-france-paris-concorde-auction-cesar
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