A Hotel Chain Is Considering Using Yield Management to Increase

question 94

Essay

A hotel chain is considering using yield management to increase profits. Its plan is to sell unsold rooms at a discounted rate very close to the night of stay. For example, an unsold Friday night room would be discounted early in the week. It estimates that the percentage of sold rooms (total) would be equal to 50+X, where X is the % discounted off of regular price. Meanwhile the % of rooms sold for full price compared to the discount would be 100-2X (some people would wait to book gambling a discount would happen). Find the ideal discount %.

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Definitions:

Non-pecuniary Job Characteristics

Aspects of a job that affect an employee's satisfaction aside from monetary compensation, such as working conditions, the work itself, and social interactions.

Sociological Factors

Social influences that affect individual behavior, choices, and societal trends, such as culture, ethnicity, and social networks.

Employment Discrimination

Unfair treatment or prejudice against employees or job applicants based on race, gender, age, religion, nationality, disability, or other protected characteristics.

Marginal Revenue Products

The additional revenue generated by employing one more unit of a resource.