A motel closed in my town yesterday

[Paul Sandhu]

A little bit about my market/competition.  There are 3 premium hotels in town.  They offer breakfast, a pool, gym etc.  They are $600-$700 per week.  People that stay here while they work don't mind spending the extra money for the services. They are not my competition, and I am not theirs.

There are 2 economy motels in my town.  They are my competition. They BOTH charge $350-$400/week for a room with 2 beds and a television.  There might be coffee in the lobby.  Their pricing is what determines my pricing.  I charge $400/week for a 2 bedroom house.  $600 for a 3 bedroom.

Yesterday one of the economy motels shut.  It had 94 rooms.  Now the other economy motel is free to adjust his prices.  Before yesterday, all 3 of us (me, motel, motel) had the same pricing.  Now with one of the motels out of the equation, it's just me and the economy motel in competition.  The owner of the economy motel knows me and knows he is losing 50-75% of his business to me.  

If you were the owner of that motel, what would you do now that the other motel is closed?  I'm guessing he might lower his prices to compete against me on price.  I still have kitchens, washer/dryers, living rooms with cable/wifi/Netflix and a much larger area to stay when not working.

If the motel lowers its prices, I'm going to keep mine the same since I offer the kitchen, washer/dryer and a better quality of life.  Does that sound reasonable or correct?

Every room living of mine has an HDTV with Netflix.  All 60 bedrooms have an old fashioned tv that I spent $2-$5 for at a garage sale.  I'm thinking about offering to buy 60 of the HDTVs from the closed motel and putting them in all my bedrooms.  Is $40 a reasonable offer for a smaller HDTV?