• Question Description: Griffin’s Lair is a short-term rental property in southeast Idaho. https://airbnb.com/h/griffinslair. After experimenting with price adjustments, the marketer determines that at a nightly list price of $199, the property will reach 80% occupancy, and at a nightly list price of $350, the property will reach 50% occupancy. Assume that the maximum occupancy, or 100%, is 365 nights. The business has the following annual fixed costs: Mortgage Interest: $15,000 Taxes and Insurance: $6000 Annual Internet costs: $1200 Variable costs: additional cleaning costs per occupied night: $50 additional utility costs per occupied night: $30 additional maintenance costs per occupied night $10 Airbnb fees per occupied night: 5%
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• 1. Using the provided data, plot a demand curve for Griffin's Lair with a price on the Y-axis and demand on the X access. The demand should be displayed in nightly units. Use a simple linear trendline to plot the demand curve, display the line equation, and forecast demand 200 periods backward and forward. Based on the equation displayed on your demand trendline, at what price will demand to be 0?
• 2. What price should the marketer set in order to achieve 100% occupancy?
• 3. Due to Covid-19, unexpectedly, demand for rental properties in the countryside increased by 50 nights per year. Now, the demand curve pushes out by 50 nights compared to the original curve. What is the new price at which Griffin's Lair could achieve full occupancy (365 nights)?
• 4. Remember that yield is Actual revenue/Potential revenue. Where: Actual revenue = actual capacity x average actual price and Potential revenue = total capacity x maximum price Let us assume that the potential revenue, in this case, will be calculated by 365 multiplied by your answer to question 1. What is the yield if we list the price at $350 per night?
• 5. Will the $199 or $350 pricing results in a greater yield?
• 6. What is the breakeven point, or in other words, how many nights does Griffin's Lair need to sell to break even, if we set the pricing at $350 under pre-covid conditions?
• 7. Will the $199 or $350 price point result in a greater profit? 8. What is the profit, if we set the pricing at $350 under pre-covid conditions?

Answer rating: 100% (QA)

Question 1 To plot the demand curve for Griffins Lair we first need to determine the demand at each price point At a nightly list price of 199 the property will reach 80 occupancy which means that the ... View the full answer