Price Mix of Hotel Industry


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PRICE MIX OF HOTEL INDUSTRY

The pricing decision is monitored by a number of factors. The magnitude of competition is the most important element in governing the pricing decision. If the intensity of competition moves upwards the hotel tariff may not increase. On the other hand when the intensity of competition moves downwards the hotel tariff may be raised. Also if a domestic big business executives or foreign tourists consider the tariff structure as a status symbol and prefer to stay in costly hotel, then the tariff structure must be followed carefully. Firstly the prices for accommodation is directly related to the following factors:

  • Room space
  • Quality of furniture
  • Carpeting
  • Furnishing
  • Bath, toilet, shower, hair dryer and trouser pressing equipment
  • Telephone, Colour tv, radio
  • Fridge, tea and coffee making equipments
  • Personal computer, office facilities and others

Normally whenever hotels upgrade or renovate, the upgradation rates are reflected in their costs.

 

Secondly the room rate is related to the market. If the market is in a posh and fashionable area with ample parking and garage facilities, and frequented by high-class people including businessmen and other groups, the prices will accordingly vary.

 

Thirdly the room rates also reflect the availability of personal comfort facilities like lounge, bar, restaurants, shopping arcade, banks, and standard of cuisine, hairdressing, swimming pool and health club. In short the room rates also incorporates the augmented services costs.


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