Room to raise the ceiling: management says its own prices, rates, or terms sit below what the market would currently bea
The model's full reasoning — Q1 2023 call → NOWe need to determine if management conveys that the company is currently charging less than the market would bear, and that they are actively closing that gap. The transcript discusses network changes, capacity adjustments, and pricing. Management mentions that they are reshaping capacity to exploit peak vs off-peak demand, and that they expect better profitability. They talk about "outsized contribution" on peak days, and that they are adjusting capacity to maximize revenue. They also mention that they are "reshaping our capacity beginning in the second quarter to exploit this dynamic" and that they expect "the changes to be fully deployed in the second half of 2023." They say "we believe we can generate better profitability with less flying, thus derisking our operations." This is about capacity allocation, not necessarily about raising prices. They also mention that they have "a clear change in consumer demand patterns" and that "the RASM premium on peak days versus Tuesday to Wednesday was 19%... expanded to over 25% today." That indicates that they are seeing higher revenue per available seat mile on peak days, but they are not explicitly saying they are undercharging. They are adjusting capacity to match demand, not necessarily raising prices. They also mention that they are "reshaping our capacity" and "eliminated a select number of longer haul routes" to reduce average stage length. This is about network optimization, not about pricing below value. They also talk about GoWild Pass and ancillary revenue, but not about undercharging. They mention that they expect to "return to pre-pandemic margins" and that they are "focused on achieving double-digit margins." But they don't explicitly say that they are charging less than the market would bear. They do say that they are "reshaping our capacity" to exploit peak demand, which might imply that they are leaving money on the table on off-peak days, but they are not raising prices; they are cutting capacity. That is a different thing.
| Ticker | Company | Call | Date | Call grade |
|---|---|---|---|---|
| MEC | Mayville Engineering Company, Inc. | Q3 2022 | 2022-11-05 | B+ |
| CAG | Conagra Brands, Inc. | Q2 2017 | 2016-12-22 | C+ |
| SOHO | Sotherly Hotels Inc. | Q3 2016 | 2016-11-08 | D |
| RCL | Royal Caribbean Cruises Ltd. | Q1 2016 | 2016-04-29 | C+ |
| HPP | Hudson Pacific Properties, Inc. | Q4 2015 | 2016-02-25 | C |
HPP · Q4 2015 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly describing a gap between its current charges and what the market now supports, then confirming that the company is already closing it through mark-to-market resets and higher new/renewal rents. Victor Coleman states that the company has “rolled out 80% plus mark to market” on recent leases 2.5 years old, and that cash rent spreads on 1.6 million square feet executed since the acquisition were “north of 30%” with “20%, 25% mark-to-market for 2016 and 2017.
MEC · Q3 2022 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices sit meaningfully below the value custom...YES Management explicitly states that they have taken pricing actions in 2022 and have "more room for margin expansion through continued value pricing even beyond the pricing actions taken during 2022." This conveys that their current prices sit below what the market would support, and they are actively beginning to close that gap with further value pricing.
SOHO · Q3 2016 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly identifying a rate gap at the Laurel hotel (and similar situations at other properties) where current charges sit below the competitive set/market, while describing active steps already underway to close that gap through continued ramp-up and occupancy/rate improvements.