Chapter 22 Question ○17

Why do hotel prices in Sharm El Sheikh be the lowest when the room occupancy rate is the highest? (Ronda Haiti) In general, hotel rates vary with room occupancy.The room occupancy rate is directly related to the demand for rooms.Sharm el-Sheikh is a resort in Egypt, where the occupancy rate of rooms in summer is much higher than in winter.So, why are the room rates of hotels in Sharm El Sheikh much lower in summer? A hotel's room rate depends not only on room occupancy, but also on the willingness and ability of potential guests to pay the room rate.Although there are fewer tourists to Sharm El Sheikh in winter, they are generally local Egyptians or other western tourists with higher income.They chose Sharm El Sheikh because the local climate is much better than the cold north.

Conversely, tourists who visit Egypt and other parts of the Middle East do not want to face the desolate winter, so they prefer to go in summer. They are mainly students and working class.The income of such tourists is generally lower than that of tourists visiting in winter, so hotels cannot charge such high room rates in winter. The above examples are mainly explained from the differences on the demand side of the market.The focus of each question is on why the buyer is willing to pay more for a certain product.The reasons for the phenomenon described in the following few examples lie mainly on the supply side.In each case the additional price or product offering is somehow related to the cost difference.