“If anyone should be able to afford our regular rates, it’s seniors,” said Adria
ID: 365526 • Letter: #
Question
“If anyone should be able to afford our regular rates, it’s seniors,” said Adrian, the rooms manager at the 480-room Barcena Resort. “You’re our revenue manager, don’t you follow economic trends? People today have more money when they get older, not less. And with the Baby Boomers starting to turn 60, they’re going to have even more to spend than previous generations. All I’m saying is that I think a senior discount for this package just leaves money on the table.” Adrian was having coffee in the resort’s restaurant with Damario, the resort’s revenue manager. They were discussing an idea Damario had presented at the last Strategic Pricing and Revenue Management Advisory Committee. Essentially, Damario had worked with the hotel’s sales and marketing department to devise a “thru-the-week” package targeting active senior travelers. Adrian wasn’t convinced it was a good idea. “I’m at the desk when they check in,” continued Adrian. “Those folks do have money.” “You’re right,” said Damario. “Senior travelers are typically among the wealthiest of all the markets that we target.” “Then why offer them special discounts?” asked Adrian.
“Because we have empty rooms,” replied Damario. “Seniors have money, but they have something even more important to us. They have time.” “Time?” said Adrian. “Time. They have worked all their lives and have had longer to save, so they have more disposable income. That’s still true, even after the most recent economic downturn. And lots of them love to travel. Of course, seniors also love discounts. Every group does, and that includes those with plenty of money. But seniors are also in a position to book with us at the last minute. They can vary their travel plans. They have no kids to worry about taking out of school. No limit on when they can get off work, because they already are off work. Permanently. And weekend travel is nice, but weekday travel is just as nice for most of them.” They have the freedom to choose. Let me ask you, when is our hotel least used?” said Damario. “Weekdays,” replied Adrian. “We’re booked solid most weekends. You know that.” “O.K. When do we need exible date travelers?” asked Damario. “Through the week,” said Adrian slowly. “Now I get it.”
Question: Assume you were Damario. What are specic price differentiation tactics you could implement in regard to this speci c discount program? Explain why each tactic you selected was chosen.
Explanation / Answer
Price differentiation tactics works best to fetch money during non peak seasons. As this case is talking about senior travellers who have flexible travelling times without any worry of family and have larger amount of disposable income, this age group should be attracted with differential pricing during non peak season. They could be offered discounts for long stay in the hotel. They could be provided with complimentary breakfast when stayed during weekdays. As they vary their travelling plans at the last moment, they could be given a larger share of refund so that they can choose our hotel without any hesitation. since they want peaceful environments, weekdays would be best for them to stay with low prices. High priced room during weekends could be given to them at the same price during weekdays. Provide them flexibility for. Their choice of room. Bundling of products and services help the resort attract more revenue since they are getting the value of two products at a less price.
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