# Elasticity of Demand

As was discussed in our Revenue Management Foundations Video, complete the calculations found on the attached worksheet and then take a photo of your complete work and upload it here.

Examples of revenue management

Don't use plagiarized sources. Get Your Custom Essay on
Elasticity of Demand
Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT!

The hotel industry is a sector which routinely makes use of revenue management strategies, artificial intelligence and the analysis of big data. We will now take a look at two examples where revenue management can be used to maximize income.

Local concert increases demand for hotel rooms

As there is always a fixed level of accommodation in any one area, local events such as music concerts can lead to a significant spike in demand. Using historic data, taken from previous events, and real-time data, hotel companies are able to accurately predict the correct pricing point for their capacity. For example, let’s assume there is a hotel with 50 rooms and a daily room rack rate of \$300. As a consequence of increased demand for the local event, it may be possible to charge \$350 per room.

The figures for this particular scenario are as follows:

50 x \$350 = \$17,500

If we compare this to the normal room rack rate, the traditional yield would be:

50 x \$300 = \$15,000

So, as a consequence of predicted demand for local hotel accommodation due to the concert, this creates an above average yield:

(\$17,500/\$15,000) x 100 = 116.66%

This is a perfect example of taking into account local events, predicted demand and using real-time data together with historic data to calculate the value tipping point.

Increasing revenues during quiet times

No hotel will ever be fully booked all of the time, but with there are ways and means of adjusting pricing in real-time to maximize revenue. Let us assume that on a relatively quiet day a hotel would normally attract 20 customers leaving 30 rooms free:-

20 x \$300 = \$6,000

This equates to a yield of:

(\$6,000/\$15,000) x 100 = 40%

However, what if historic data suggested that a reduction in the room rack rate to \$250 would attract 35 customers as opposed to 20? The income calculation is very different:

35 x \$250 = \$8,750

This equates to a yield of:

(\$8,750/\$15,000) x 100 = 58.33%

This is a perfect example of using real-time data and artificial intelligence to find a new price point in the quiet times. The overall yield is increased from 40% to 58.33% simply by reducing the room rate from \$300 down to \$250.

Order NOW for a 10% Discount
Pages (550 words)
Approximate price: -

Why Us?

Top Quality and Well-Researched Papers

All ourbpapers are written from scratch. In fact, Clients who ask for paraphrasing services are highly discouraged. We have writers ready to craft any paper from scratch and deliver quality ahead of time.

Our writers keeps you posted on your papers progress - providing you with paper outline/draft. You are also at liberty to communicate directly with your writer.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time, in many cases quite ahead of time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

## Calculate the price of your order

Total price:
\$0.00

How it works?

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

## Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.