Hotels(and gas stations) have been doing this since the 90s. Any time there is a big event in town, prices go up pretty much every where. That has been my experience the last 25 years living here.
As far as Arts Fest, I have not heard that it isn't doing well. I do think the prices for most of the stuff being sold is somewhat outrageous. I can never pull the trigger on a $500-$1000 picture/sculpture/whatever. That is airfare to Europe for a trip. Usually hot as balz and nasty T-Storm always rolls thru one of the days. Restaurant and Bars are always packed and I made it a habit to not go downtown during this weekend and if we want to eat out go to a surrounding town.
However, Arts Fest is an institution here and brings a lot of money to the local economy that weekend. I guess these are the same rumors we heard about hotel prices for the playoff game against SMU and no one was going to show up. Guess how that turned out??!!!
