Hotel Galway is a 50 room Boutique hotel in a pop-ular city break destination in Ireland. Until recently the hotel has priced each room at $120 for bed and breakfast. On aver-age 40 rooms are occupied every weekend. The variable cost of each occupied room is $30. Following an internal review man-agement has decided to try a revenue management approach, with rooms priced at $90 for bookings up to one week early and $180 for bookings within a week of their stay. It is esti-mated the hotel will sell 28 rooms at the lower price and 14 at the higher price. Variable costs will not change. Recommendwhich approach is the most feasible.

Hotel Galway is a 50 room Boutique hotel in a pop-ular city break destination in Ireland. Until recently the hotel has priced each room at $120 for bed and breakfast. On aver-age 40 rooms are occupied every weekend. The variable cost of each occupied room is $30. Following an internal review man-agement has decided to try a revenue management approach, with rooms priced at $90 for bookings up to one week early and $180 for bookings within a week of their stay. It is esti-mated the hotel will sell 28 rooms at the lower price and 14 at the higher price. Variable costs will not change. Recommendwhich approach is the most feasible.

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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