If you are not familiar with Priceline.com Inc., go to its Web site. Assume that an individual bids $60 on Priceline.com for a room in Dallas, Texas, on August 24. Assume that August 24 is a Saturday, with low expected room demand in Dallas at a Marriott International, Inc., hotel, so there is excess room capacity. The fully allocated cost per room per day is assumed from hotel records as follows:
Housekeeping labor cost* ....... $30
Hotel depreciation expense ....... 42
Cost of room supplies (soap, paper, etc.) .. 5
Laundry labor and material cost* .... 10
Cost of desk staff ............ 5
Utility cost (mostly air conditioning) .... 3
Total cost per room per day ...... $95
*Both housekeeping and laundry staff include many part-time
workers, so that the workload is variable to demand.
Should Marriott accept the customer bid for a night in Dallas on August 24 at a price of $60?
DATE
Question answered on Jul 22, 2018
PRICE: $17
Solution~000637621.zip (18.37 KB)
