Assessment Task for TOURISM PRICING

ONLINE EXERCISES

1. You are going on a three-day business trip for your company to Pittsburgh,
Pennsylvania. You have up to $300 a day to spend on lodging and food. If you do not
spend the money you save money for your company; you do not get to keep the
unspent money. You will check in on October 18 and check out on October 21. Choose
the hotel where you would stay; what Web site would you use to pick the hotel? What
did your search process involve? How many Web sites did you use to make your
selection? What criteria did you make in choosing the hotel? (note: look up the hotel
rates, but please do not make an actual reservation.)

The first thing that I did is that, using Google, I decided to search for a website that
can easily search hotel by just typing the things I need (location, prices etc.). So upon
searching, I decided to use tripadvisor. I chose this website because you can easily use
it by typing everything you need for a hotel accommodation like location, room
availability, price deals, amenities, hotel rate, feed backs and so on and they will suggest
you different hotels. Using that website, I typed to what location I am going to stay
(Pittsburgh, Pennsylvania), what particular date and how many days I will stay (October
18 to October 21, 3 days), and how many room I need (since I will go for a business trip
by myself, I chose one room with single bed only).

Upon searching for the details that I put, tripadvisor provided different hotels
and on the left side, you can also check what you need for a hotel like following
COVID safety measures, price range that you would like, free breakfast and so
on. I used to check the properties taking COVID safety measures because I
want to ensure my safety first, free cancellation so that I can easily cancel the
reservation if there is any unexpected things that will happen, and free breakfast
so that I will not go outside early in the morning.

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 I used to open many hotel websites and tried to compare their room
facilities, prices, promos or packages, amenities,reviews and if there is a free
WIFI so that I can check my emails while I am having my stay. And I finally
come up with Hyatt House Pittsburgh South Side after reading the feed backs of
the past customers in the reviews and they used to like the hotel accommodation a

I checked the room availability for October 18 to 21 and the room facilities. They
also used to have room promo of 55% discount with free WIFI access, and good
room ambiance. Before confirming the booking, I check first the necessary information
that I put (location, date, room type) and then if it is all ok, I confirmed the booking.
Upon having this activity, I learned that in booking a hotel, you need to consider
first your needs and make sure that everything is in place wherein you must gather
various information first before finally deciding to what particular hotel you are going to
stay. After gathering the information, make sure that the details that you will put is in
place to refrain from misunderstanding, miscommunication and to save time and effort
as well.

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 EXPERIENTIAL EXERCISES

1. Conduct a price comparison of several hotels or restaurants in the same

class. What price differences did you find? Do you feel the companies that
had the higher prices could justify those higher prices by offering additional
features or a higher-quality product?

Every hotel has its own unique pricing considerations depending on type,
location, size, market demographics, level of competition and type of service
offered. I chose five-star hotels in the Philippines and analyzed their price
differences. Five-star hotel used to have higher prices because definitely these
hotels add value to the prices. They offer a diff erent atmosphere, high end room,
service quality, advanced technology, well-trained staff and so on. Instead of just
selling just rooms, they also creatd specific packages inclusive of additional
offerings/services at a reasonable rate. From this, they offer additional features with
higher-quality product to really meet the needs and wants of customers and exceed
their expectations.
In connection with pricing, they used to have the prestige pricing wherein it is a
pricing strategy that they sets a high price with high quality value of products and
customer is willing to pay higher prices in order to receive specialized attention and
high quality products.
SITUATIONAL EXERCISES

1. You just have been hired as the dining room manager at a local hotel. The
manager asks you to evaluate the menu prices to see if they need to be
adjusted. How would you go about this task?

As a dining room manager, I will conduct a research on evaluating the menu

items. It is important in every business because you will know if the menu items
are profitable or not and if there should be any changes or revisions that should
be done.
Last semester we have tackled how to balance menu so I will use it as a
guide in evaluating the menu items.

The steps in evaluating menu items are:

1. Calculate food costs for each food item

Food cost is the actual peso value of the food used by an operation during a
certain period. It includes expense obtained when food is consumed for any

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 reason (food sold, given away, wasted or even stolen). Use this formula to get
the food cost ratio: food cost ratio= food cost/ sales. And the food cost must be
28-30%

2. Determine the sales price of each food item (Selling price= cost per
serving/ food cost ratio)
3. Calculate contribution margin by unit (sales price of the item minus the cost
of the item)

Using this three step, I will know if the food cost is enough in covering the fixed
expenses and if it is not enough I need to adjust the menu selection
I can also use the Menu Engineering wherein it balance the high and low
food cost items and it strategically featuring or promoting items to help reach
the targets. Sales menu items are analyzed to put menu items in four
categories:

⮚ Popular and profitable

⮚ Popular but not profitable
⮚ Not popular and profitable
⮚ Neither popular or profitable

If a menu item is popular, but unprofitable, the restaurant owner may:

● Substitute side items with lower costing side items

● Reduce the portion size to reduce cost
● Raise the price of the item
● Use lower costing food items

However, the restaurant owner must make sure that these changes will not
greatly affect the popularity of the item.

Profitable but Unpopular

Here, the restaurant owner may:

● Encourage waitstaff to recommend these items to customers

● Offer specials on these items to get customers to try the items so they will
purchase the items at a later date at full price

Reference:
Curcuru & Associates CPA, PLC (2013, August 5). How a Restaurant Should
Evaluate Its Menu for Profit & Customer Satisfaction. Retrieved from
http://curcurucpa.com/blog/menu-evaluation/

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 Consumers’ perceptions of price bundles vary depending on the traits of the
market segments. Which customer segment do you think is the most sensitive
to pricing strategies?
Price sensitivity can be defined as the degree to which consumers' behaviors
are affected by the price of the product or service. Price sensitivity is also known
as price elasticity of demand and this means the extent to which sale of a
particular product or service is affected. On the other hand, price sensitive
customers are those who view price as a serious factor in purchasing a product
or service and when there is a sudden change with the price, their buying
behavior were affected. For me, those people who are in behavioral segment are
the most commonly sensitive to pricing strategies. These are the following
factors under behavioral segment: benefit sought, purchase, intent, occasion,
buyer stage, user status, life cycle stage and engagement.
Thus, if there is changes in the pricing, their decision making will be affected
and they will try to evaluate their buying behavior if the product or service that
they will purchase will be useful and worth it. For instance, products like alcohol
may be purchased as a result of an emergency like the pandemic of COVID 19.
If one alcohol seller is selling it at a lower price than the other (considering same
quality), customers will definitely go to the one which offers a lower price. The
higher the price, the demand for a particular product will go down.

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