Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:The previous Revenue Manager, in order to boost the occupancy with domestic guests, over the past 3
years has implemented a special rate for Malaysian Residents which gave them the opportunity to
book a standard room (sleeps maximum 3 adults and one child) for approximately RM244 per night
which constitutes a 30% discount of the normal price of RM325. This has led to a significant number
of return customers who have come to Aloft every December for the past three years. The new
General Manager, in an attempt to raise RevPAR is suggesting to discontinue the discount this year.
a. Outline why the stopping of the discount may lead to a fall in occupancy using the concept of
reference pricing and formulate an altermative to just stopping the discount.
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