Reference no: EM13966798
The Tropical Paradise Resort is located on the coast of an exotic Pacific island. Room rates are $300 per night, which includes free access to the pool, gym, and tennis courts. The resort also offers the following services:
Aerobics classes ($5 per)
Therapeutic massages ($40 per)
Scuba-diving trip to a nearby coral reef ($60 per)
Day trips to an island volcano ($100 per trip)
The average stay is five days. The hotel is considering two pricing options:
1. Charge the regular room rate and charge separately for the four services above
2. Charge a higher room rate, which includes the services
The resort’s objective is to maximize long-term profits by attracting repeat and new customers. Should they price their services separately or bundle them? Why? Besides prices, what other factors are important in your decision?
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