+1
Raising prices get people to do voluntarily what we as a society want to have happen - in this case, get more people in hotel rooms.
Raising prices get people to conserve, which benefits the whole.
Rising prices also sends out a signal to the market to produce more and send it fast so you can make a profit. As more is sent (supply increases) that causes prices to fall.
If "price gouging" can not occur, if prices can't go up, the market does not get as strong of a signal to produce more faster as the increase in profit does not exist and the shortage remains more severe and lasts longer.