Upselling and differential pricing

“Twenty bucks! I can’t believe that,” said Ralph.

“Believe it. I heard him,” said Karen.

“You’re telling me,” Ralph said, “that when Mr. James was checking in and asked our desk clerk the difference between our King Suite and our Deluxe Suite, our guy told him . . .”

“Twenty bucks,” interrupted Karen.

Mr. James, a new guest, had just checked into the Lamar Hotel. When he arrived, he asked Mike, the desk agent checking him in, the room rate for the King Suite he had reserved. Mike replied “$179.99,” the rate shown in the PMS.

When Mr. James then asked the price of a Deluxe Suite he had seen advertised, Mike had quoted the approved rate of $199.99. When Mr. James then asked what the difference was between the two suites, Mike replied, “Twenty bucks.”

Karen, the hotel’s front office manager had overheard Mike’s comment and was now discussing the incident in the office of Ralph Blount, the hotel’s GM.

“But the Deluxe Suite has an oversized desk, ergonomic chair, 48-inch high-def flat-screen TV, and a whirlpool tub.” protested Ralph. “It’s an upgrade from a King Suite in a ton of ways. What did Mr. James do then?”

“He saved twenty bucks,” said Karen.

  1. Assume Mike wants to be a conscientious employee. Why do you think he answered this guest’s question as he did?
  2. How do you think Mr. James now views the pricing program in place at the Lamar hotel?
  3. It is important that all employees who sell to guests understand their company’s product versioning efforts. Who, in this hotel, do you think is responsible for ensuring Mike’s answers to guest rate inquiries support the total revenue management efforts of this property?