For this case study, it is important to remember that although you may have some good ideas, you need to back those ideas up with facts. In order to get full points, when answering the questions to this case study, use examples and references from the chapter you just read. You may also use references to outside sources if you like, but just simply stating that you believe this should be done or that should be done without backing up where those ideas came from will not gain you full points. It is sometimes easier to consider it as if you were a newly hired employ, would a general manager listen to your idea simply because you thought it was a good idea, or would the general manager be more receptive to you offering the idea with facts from a hospitality management textbook? To the best of your ability, answer the three questions below for the following mini-case study.
Mini-Case Study: “Demand-Driven Rates Drive Kaiser to the Competition”
On October 10, Mr. Doug Kaiser telephones the Gizmo Motel and explains to the reservations agent that he would like to reserve one single room from December 11 through December 15. The agent checks room availability information and finds that although there are rooms available for all four nights that Mr. Kaiser is requesting, the night of December 13 is almost sold out. The agent explains to Mr. Kaiser that the motel will need to charge him a $15 premium, added to his $65 room rate, for his room on the night of the thirteenth.
Mr. Kaiser, confused about the differential rate, asks to speak to the reservations manager. The manager, Ms.Betty Lou Lewis, restates the motel’s policy of charging premium rates on those nights for which there is high demand. Mr. Kaiser thinks about the demand-driven policy and agrees it is reasonable. He reaffirms his reservation and hangs up.
In late November, Mr. Kaiser calls the Gizmo Motel and advises the reservations agent that his travel plans have changed. He will be needing his single room only for the nights of December 11 and 12. He requests that his reservation be modified. Recalling the motel’s unusual pricing policy, he asks for a quoted room rate. She informs him that his room will cost $75 per night. He explains that his rate was formerly $65 for the nights of December 11 and 12. The agent in turn explains that the demand for rooms on those two nights has significantly increased and, therefore, so have the motel’s room rates. Frustrated by the fluctuating rates and the demeanor of the reservations agent, Mr. Kaiser cancels his reservation and calls the Cybex Inn, the motel’s primary competition. There he receives a $60 nightly rate and a cheerful thank-you for his business.
1/Is a demand-driven approach to room rating a good idea? Should a room be assigned different rates during a guest’s stay?2/Is it appropriate to change the guest’s previously quoted room rate when guests change their reservations? When might such a pricing plan be effective?
3/How should Mr. Kaiser’s business have been handled?
