The Tropical Paradise Resort is located on the coast of an exotic Pacific island. Room rates are $300 per night, which includes free access to the pool, gym, and tennis courts. The resort also offers the following services:

• Aerobics classes ($5 per)

• Therapeutic massages ($40 per)

• Scuba-diving trip to a nearby coral reef ($60 per)

• Day trips to an island volcano ($100 per trip)

The average stay is five days. The hotel is considering two pricing options:

1. Charge the regular room rate and charge separately for the four services above

2. Charge a higher room rate, which includes the services

The resort’s objective is to maximize long-term profits by attracting repeat and new customers. Should they price their services separately or bundle them? Why? Besides prices, what other factors are important in your decision?

Answer rating: 100% (QA)

In an ideal situation the resort would offer both pricing models to appeal to everyone However if on... View the full answer