You operate a Caribbean destination resort. You currently offer plans for a cruise departing from the resort
Question:
You operate a Caribbean destination resort. You currently offer plans for a cruise departing from the resort and plans for a casino stay. It is expected that in 2021 there will be some return to more normal travel. You will re-launch your advertising for 2021 announcing that customers will be able to do both for one price. Your marginal cost per customer is $4800.
Customer Preferences
Cruise | Casino | |
Customer1 | $7,000 | $3,000 |
Customer2 | $2,000 | $6,000 |
You know that about 21% of your customers decline cruises because of seasickness. At least 12% decline the casino trip saying they don't believe in gambling. As a rough approximation, you estimate that approximately 33% of your customers will never bundle. Given the distribution of the preferences, will the mixed bundling increase profits? You must show the calculations that support your conclusion.