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| [[Category:Hotel info]] __NOEDITSECTION__ | | #REDIRECT [[Price elasticity]] |
| ''→ Go! [[:Category:Hotel info]]'' <br>
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| {{Running competition}}
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| == Elasticity ==__NOEDITSECTION__
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| There is not much knowledge in the market you are active in on price-elasticity. You can check.
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| [http://en.wikipedia.org/wiki/Price_elasticity_of_demand this article]. For sure your customers will also have some kind of
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| reaction on prices which will not be linear. But, yes there is elasticity of the price in the market. This means that customers will react on the price in a certain way. They will have their decisions as to buy the product or not depending on the price-change. Generally spoken a higher elasticity would man that customers will react vividly to a price change: if your price goes up with 10%, you might loose more then 10% of your occupancy rate. If you have the price dropped with 10% this will bring you more then 10% extra sales.
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| == Pitfalls ==__NOEDITSECTION__
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| * Of course the price is not the only item customers decide on
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| * Customers remember the prices of last year as well
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| * Elasticity is always related to a price range. Breaking the barrier of € 100 or € 200 by raising your price from € 98 to € 102 has much impact(a higher elasticity) then raising the price from € 90 to € 94 (almost the same increase).
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| * Getting a buyers strike. If the prices go way to low or way to high you will a buyers strike in the market, the elasticity will bring an extreme reaction at a certain point as you (all) might have lost credibility then. This means people will chose for the competition on a higher level and will exchange the hotel plans for a long haul trip or a package deal or even buy new furniture instead of booking. All of the demand side then will shrink.
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| So you can try to do some calculations on this, this might give you a rough idea and indication.
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| <br><hr>
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| ''→ GO! [[#top|Top of this page]]''
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| <center><small>''Emerald Forest Hotel'' offering an <font color="green">'''emerald''' </font color="green">hotel experience!
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| | Run your own hotel in this management simulation.</small></center>
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