Question
Hotel Galway is a 50-room Boutique hotel in a popular city break destination in Ireland. Until recently the hotel has priced each room at $120
- Hotel Galway is a 50-room Boutique hotel in a popular city break destination in Ireland. Until recently the hotel has priced each room at $120 for bed and breakfast. On average 40 rooms are occupied every weekend. The variable cost of each occupied room is $30. Following an internal review, management 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 estimated the hotel will sell 28 rooms at the lower price and 14 at the higher price. Variable costs will not change.
- Recommend which approach is the most feasible.
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