case study

KEY CONCEPT CASE STUDY "So just what is it you do all day long? Try to figure out how to raise our prices so no one notices?" asked Sam with a good-natured smile. Sam, the F&B director at the Barcena Resort, was having coffee in one of the property's restaurants with Damario; the resort's newly appointed Revenue Manager and very much. "Trust me," replied Damario. "Guests always know when we raise prices!" "Well that's the problem with you roomies. You just change prices too much," said Sam. "What do you mean?" asked Damario. "Well, as long as I've been here, whenever the resort gets busy, our room rates go up. And the people managing our room rates think it is O.K. to jack up the prices. Can you imagine how my guests would react if I raised our dinner prices whenever my restaurant was full? It wouldn't stay full very long. I can bet you that!" said Sam. "It's true that the pricing of rooms and food in most hotels are pretty different," said Damario. "Yes, but why is that?" asked Sam. "Why is what?" asked Damario. "Now I know you have a future as a consultant," laughed Sam, "they usually answer a question with a question. What meant was, why do you feel like our room prices have to be managed so much? In my department, my motto for prices is Set 'em and then forget 'em. At least until the next menu reprint. I think changing prices all the time would be too confusing for my customers, and I think it would drive my servers crazy trying to remember exactly what today's prices are if i changadithem the time! Page 178 / 530 1. Assume you were Damario. How would you explain to Sam the differences inherent in pricing hard supply constraint products, soft constraint products, and those with no supply constraints? 2. Consider your answer to the previous question. Do you think that guests of the Barcena Resort, if they overheard your conversation with Sam, would think your explanation to him reflects a fair and ethical pricing philosophy on the part of the resort? 3. Is it ever fair and ethical for a revenue manager who is responsible for the pricing of hard (or soft) constraint products to increase prices by 10 percent in response to increased consumer demand? 50 percent? 100 percent or more? Who within a hospitality business should be responsible for answering questions such as these? 4. Consider your answers to question 3. What, if any, role should the government play in influencing the decisions made by pricing managers? Is it reasonable to assume that politicians without a background in business will understand the challenges of hard and soft constraint pricing? Who within the hospitality industry do you feel should take a leadership role in ensuring that government policy maksathe local, state, and national levo do understand