Considerations other than cost in pricing decisions. Fun Stay Express operates a 100...

Considerations other than cost in pricing decisions. Fun Stay Express operates a 100-room hotel near a busy amusement park. During June, a 30-day month, Fun Stay Express experienced a 65% occupancy rate from Monday evening through Thursday evening (weeknights). On Friday through Sunday evenings (weekend nights), however, occupancy increases to 90%. (There were 18 weeknights and 12 weekend nights in June.) Fun Stay Express charges $85 per night for a suite. The company recently hired Gina Johnson to manage the hotel to increase the hotel’s profitability. The following information relates to Fun Stay Express’ costs:

Fun Stay Express offers free breakfast to guests. In June, there were an average of two breakfasts served per room-night on weeknights and 4 breakfasts served per room-night on weekend nights.

1. Calculate the average cost per room-night for June. What was Fun Stay Express’ operating income or loss for the month?

2. Gina Johnson estimates that if Fun Stay Express decreases the nightly rates to $75, weeknight occupancy will increase to 75%. She also estimates that if the hotel increases the nightly rate on weekend nights to $105, occupancy on those nights will remain at 90%. Would this be a good move for Fun Stay Express? Show your calculations.

3. Why would the guests tolerate a $30 price difference between weeknights and weekend nights?

4. A discount travel clearinghouse has approached Fun Stay Express with a proposal to offer last-minute deals on empty rooms on both weeknights and weekend nights. Assuming that there will be an average of three breakfasts served per night per room, what is the minimum price that Fun Stay Express could accept on the last-minute rooms?