Chapter 49 Question 042

Why are hotels with minibars so expensive? (Kern Wilson) If you want to park in Manhattan.A bottle of Evian water from the small bar in the Parker Meridian will set you back four dollars.But if you're willing to walk over to the Duane's around the corner, you can get a bottle for ninety-nine cents.Why is the price increase of the small bar attached to the hotel so ridiculous? A specialty chain that sells everything cheaper than non-specialty stores.After all, chain stores have a large sales volume of products and can use specialization to achieve high efficiency.This probably shows that the chain store sells a bottle of mineral water for one dollar, and the hotel sells it for two dollars to maintain the cost.Either way, it's hard to believe that hotels cost four times more than chains.

The reason why the prices at the mini bar are so high is probably more justifiable because the sale of alcohol is an indirect means used by the hotel to provide discounts to price-conscious customers.In order to achieve a high occupancy rate of rooms, hotels must provide rooms at competitive prices.Many hotels, for example, offer lower prices online because Internet users are more price sensitive than other shoppers. Due to the extremely fierce competition in the hotel industry, the profit margin of the hotel is not too high.To offer bigger discounts to price-conscious guests, hotels must find ways to find extra revenue from other guests.The hotel fully understands that the exorbitant prices for items in the mini bar will surely deter many guests from buying anything.But they also know that less price-conscious customers won't be put off by the high prices at the small bar.The extra profit from this part of the guests can help the hotel to make a bigger discount on the room rate.In this example, the discount threshold set by the hotel is for the guest to give up the convenience of shopping at the minibar.By doing this, the hotel lowered room rates (lower rates were achieved by charging higher prices at the mini bar).