TAMPA — Many New Year’s Eve revelers who plan on drinking will turn to the Uber ride-hailing service Thursday night.
But prospective riders accustomed to Uber’s normal bargain pricing should plan to spend a lot more. The network charges higher rates, three or more times its regular pricing, in order to answer the higher demand on the biggest party night of the year.
Uber calls it “dynamic pricing,” and it has had its critics, especially among supporters of the taxi cab industry.
“People need to be forewarned they could end up spending more with Uber than with traditional taxi companies because there are no controls over their price indexing,” said Hillsborough Commissioner Victor Crist, who chairs the county’s Public Transportation Commission.
The commission regulates taxicab rates but has failed so far to have its way with Uber and Lyft, the other dominant ride-sharing company in the area.
“Just as easily as they can go up, they can go back down,” Crist said. “There are no restraints on them. Taxicabs are prohibited from price gauging.”
Uber leaders make no apologies for dynamic pricing. They say the company’s sliding scale isn’t price gouging but the only way to field enough drivers when demand levels spike.
Uber drivers are independent contractors who can choose when they want to accept rides. Sometimes, they’re ready to clock out and go home as the demand for rides peaks.
That was the case in early 2012, when Uber’s team in Boston noticed a high rate of “unfulfilled requests” during late-night and early morning weekend hours, according to blogger and Uber board member Bill Gurley.
Drivers were turning off the clock and going home around the same time bar hoppers wanted rides, Gurley said.
Uber solved the problem by paying drivers more to stay on the clock longer.
“The supply curve was highly elastic,” Gurley said in his blog, “Above the Crowd.” “Drivers were indeed motivated by price.”
On average, 80 percent of gross fares go to the drivers, Gurley said.
Of the share retained by Uber, a large portion goes to cover variable expenses such as payment processing, fraud, refunds, customer service.
Tim Curtis, a UPS Store franchise owner, drives part-time for Uber to raise money for his golf green fees and for a family cruise he plans next year. Curtis said this year will be the first time he drives for Uber on New Year’s Eve.
“I might be more inclined to stay on much longer if the demand is such that it is a greater incentive for me to stay on,” Curtis said. “I’m a capitalist at heart. I love that Uber does this.”
Curtis said experienced Uber riders with whom he has spoken were well aware of dynamic pricing. Many also are aware of the fare estimate service on their Uber smart phone applications. Before they book the ride, they can see about how much it will cost.
Uber also has an app feature called Surge Drop that alerts customers if surge pricing is going to end at a certain location in the next 30 minutes.
“They will sometimes wait until the drivers exceed demand, and they go back to the low Uber prices,” Curtis said. “The beauty of it is they have the ability to know that up front.”
Uber is partnering with Mothers Against Drunk Driving this holiday season to raise awareness about the dangers of drinking and driving. In the Tampa Bay area, Uber will donate $5 to the local MADD chapter any time a new rider downloads the Uber app and takes a first ride with the promo code MADDTB.
The company is also donating $10 to MADD for every ride home purchased through UberEVENTS+MADD. UberEVENTS allows party hosts to buy Uber rides for their guests.
Another option for tipsy revelers in Hillsborough County is Alert Cab, a partnership between Pepin Distributing and the Hillsborough Public Transportation Commission. Alert Cab allows patrons on New Year’s Eve to ask the bartender to call a taxi, and Pepin, Tampa’s Anheuser-Busch distributor, will pay the full fare. Pepin partners with Gulf Coast Transportation, United Cab, to provide the service.
Last December, 788 people died nationwide in drunken driving incidents — one death every 57 minutes, according to the National Highway Traffic Safety Administration.
Rhonda Cardoso-Smith and her husband Scott plan to take Uber twice this holiday weekend. On New Year’s Eve, the couple will hail a ride from their Palma Ceia home to Ybor City. On Thursday, the couple and their family and friends will take Uber to Raymond James Stadium for the Outback Bowl.
The last time they went to the bowl game, about eight years ago, Cardoso-Smith said they drove their car and had to pay $15 or $20 to park. When the game was over, it took them a half hour to get out of the parking lot.
“We have used Uber in Boston and New Orleans,” Cardoso-Smith said. “I like it because it is cheaper than a taxi and much more personable. The drivers have been very nice, fun and respectable.”