If you are not familiar with priceline.com, go to its Web site. Assume that an individual bids $50 on priceline.com for a room in Dallas, Texas, on August 24. Assume that August 24 is a Saturday, with low expected room demand in Dallas at a Marriott hotel, so there is excess room capacity. The fully allocated cost per room per day is assumed from hotel records as follows: 

Housekeeping labor cost* $25

Hotel depreciation expense 37

Cost of room supplies (soap, paper, etc.) 5

Laundry labor and material cost* 10

Cost of desk staff 5 Utility cost (mostly air conditioning) 3

Total cost per room per day $85

*Both housekeeping and laundry staff include many part-time workers, so that workload can be matched to demand

Should Marriott accept the customer bid for a night in Dallas on August 24 at a price of $50?

Answer rating: 100% (QA)

To determine whether Marriott should accept the customer bid for a night in Dallas on August 24 at a ... View the full answer