Hilton Starbucks Thinks I Won't Walk 1 block for $1

I have shared most of my thoughts from the Western Economics meetings, but one final thought after I returned home. The Hilton at Union Square in San Francisco has a Starbucks that charges $2.85 for a cup of coffee the Starbucks just down the street charges $1.85 (or something there about), so the Hilton charges a $1 more.

Why might this be the case? First, hotel guests might not know there is a starbucks one block away (I discovered this only because the Hilton had no free wi-fi (see this old post) and a 15 minute line for coffee). Second hotel guests are often attending conferences and may be time constrained (which is why I did buy one cup of coffee for $2.85). Third, someone else might be paying for the coffee purchase (in my case that wasn't true since I'm not using Towson travel funds for coffee).