Hotel Economics and Pricing Strategies

Katie Sullivan, a front desk employee at Skyway Inn, explains the hotel's pricing and business strategies, focusing on supply and demand principles, competition, and psychological pricing. She discusses the impact of a local music festival on hotel demand and the importance of balancing pricing to remain competitive. The video also covers factors affecting profit, such as expenses and customer reviews, and concludes with a summary of key points.

What is the standard nightly rate at Skyway Inn before tax?

• $299

• $99

• $399

• $199

How does demand typically change when supply decreases?

• Demand increases

• Demand decreases

• Demand remains the same

• Demand fluctuates randomly

What is the relationship between supply and demand?

• Direct

• Cyclical

• Inverse

• Unrelated

What is the main goal of competition among hotels?

• To make the most business while still making a profit

• To offer the lowest prices

• To have the best location

• To have the most rooms

What is the concept of psychological pricing?

• Pricing to break even

• Pricing to influence perceived value

• Pricing based on cost

• Pricing based on competition

Why did Skyway Inn decide to increase their room prices to $499?

• To remain competitive and make a profit

• To match the highest competitor

• To offer a discount

• To discourage customers

What is a key reason for raising prices during a music festival?

• To offer special discounts

• To take advantage of increased demand

• To reduce occupancy

• To match competitor prices

What is one factor that affects a business's profit?

• The type of furniture used

• The supply of available rooms

• The number of employees

• The color of the building

How do reviews impact a hotel's value?

• They have no impact

• They can increase or decrease perceived value

• They only affect new customers

• They only affect returning customers

What is one expense that affects hotel profit?

• Employee salaries

• Guest hobbies

• Marketing campaigns

• Room color schemes