Question

The interContinental Hotel at Tsim Sha Tsui has 100 total rooms available for Dec 31. There are two types of customers, business customers and leisure customers. InterContinental charges a high rate of $300/night and a low rate of $120/night. High-rate guests do not need pre-booking and has time flexibilities: low-rate guests need pre-booking. Assume business customers always take the high rate option and leisure customers always take the low rate option. Leisure customers always book far earlier before business customers and there are sufficient leisure customers.

Which of the following actions would increase the optimal protection level for business customers?
A. Increase both the high and low rates by a factor of two
B. Decrease the high rate from $300 to $200
C. Decrease both the high and low rates by half
D. Decrease both the high and low rates by $20
E. Increase both the high and low rates by $20

Answer 1

The question asks about the impact of decreasing or increasing rates at the InterContinental Hotel at Tsim Sha Tsui. Decreasing the rates by half may attract more leisure customers, while increasing the rates may deter some customers from booking.

Step-by-step explanation:

The subject of this question is Business. The question asks about the potential impact of decreasing or increasing the rates at the InterContinental Hotel at Tsim Sha Tsui. Currently, the hotel offers two types of rates - a high rate of $300/night and a low rate of $120/night.

If both the high and low rates are decreased by half, the new rates would be $150/night and $60/night, respectively. This would likely attract more leisure customers who previously opted for the low rate. The decreased rates may also make it more affordable for some business customers to choose the low rate instead.

On the other hand, if both the high and low rates are increased by $20, the new rates would be $320/night and $140/night, respectively. This would likely deter some leisure customers from booking and may make the high rate less appealing to some business customers.