Essay: Hotel Industry For Dubai Trip." (41 Characters)

Price Discrimination Theories and Hotel Industry of Dubai

Discuss about the Hotel Industry for Trip to Dubai.

As per discussed by Wu, Liu, Chen, and Wang (2014), customers may experience different prices for the same identical good or services by the suppliers, not due to the supply cost. Though charging different prices for same goods is not necessarily price discrimination. Product differentiation due to difference in product features, grants suppliers the power to charge various prices (Zhelobodko, Kokovin, Parenti and Thisse, 2012). In the light of this report, customers will be provided with a detailed account of the trip to Dubai. The report will firstly, start with the discussion of the concept of two pricing economic theories to study the Hotel industry. Following will be the strategies adopted by the manager of the hotel of the destination spot. It will highlight the strategies of the manager in terms of Pricing Strategy, Market Segmentation, managing Distribution Channel and Information System. The report will also manifold the tourist package of Dubai and can help the tourist to decide accordingly, in consideration of the prices. Lastly, the conclusion will provide a quick glance for the tourist to study the price differentiation of hotel industry of Dubai.

Price discrimination can prevail in the market due to two factors, differences in elasticity of demands and existence of barriers to prevent the customers to change their demand that is changing from one supplier to another. As per price elasticity of demand, the customers are charged lower prices if their price elasticity demand for the hotel services is high while low price elasticity demand for hotel services will ensure the suppliers to charge higher prices. Consumer switching is highly hindered because of the no resale of services rendered by hotel industry. Consumers availing the hotels’ offers at lower prices cannot cash back these offers and have to avail it at any cost. Airlines and hotels responsive level is too high to a sudden Upsurge in bookings, a practice known as revenue management. The hotels have discretion over prices, this power enable them to set prices. Price discrimination allows hotels to maximize profits by exploiting customer heterogeneity in readiness to pay. In a nutshell, the theory starts from the observation that a hotel with market power would like to charge more to the consumers who value the service more. Hotels with brand images enjoy price setting trends. Hotels build atmosphere of competition.( Balaguer, Pernías, 2014)

Plan of Trip to Dubai

The hotels then further imply the segmentation of markets to aid the study of their monopolistic nature (Sharma, Lambert,2013) The hotels charge the consumers according to the time period they have booked the hotels. The early birds might enjoy the discount packages while the customers having dire need for rooms booking, may pay high prices for the same rooms. While Hotels that implement variable pricing, for example, hotels that hire a sales manager with quantitative skills, get access to market data from third party providers, and invest a tremendous amount of resources to analytically analyze demand trends. A large proportion of the costs associated with revenue management are fixed. Smaller hotels, for which the incremental outcomes may not justify a full enactment of revenue management, prefer to vary prices only occasionally (week-end and holiday). Courty andPagliero (2012) give a sense of the level of the profits maximisation from price discrimination. Many hotels typically get away with schemes that started unwanted responses when used by Sony, Coca-Cola, and the mail company described by Anderson and Simester (2010). These schemes are the variations in prices due to the discounts offered for certain period.

I planned to visit Dubai by the end of May for my vacations, though it was hot enough but the rates were very nominal for “the city of superlatives.”( Monsef, Al Hajaj, Al Bast,2015) I reached the city via flight of to Dubai. Though the city is occupied with skylines and bizarre of shopping malls but I managed to plan a budget trip to the city of riches. I opted for Weekend Escapes Dubai Package which cost $ 359.36.It offered 3 nights and 4 days stay at Landmark Plaza. It offered airport pick up service of $ 12.25. As well activities were planned for desert safari and Dubai Burj Khalifa tour. While I did an extra expenditure of $ 11 to use the metro service of the city.

On the first morning, desert Safari and Dhow Cruise Dinner – Marina, it cost $98.01. This two hours cruising tours has a complete package with entertainment, Buffet Dinner and beautiful scene of Burj Al Arab, Atlantis and Marina. While the other day offered an exotic dinner at 124 floor of the Dubai Burj Khalifa at $ 91.20.It was the most expensive treat I ever gave myself. Lastly, it picked me up from Deira and charged $12.25.

I planned the trip at the time of year when city had no occasions to celebrate and offered early birds offer on accommodation which made a four star hotel stay for 3 nights and 4 days very nominal. The trip was of 4 days stay at Dubai with the idea of fewer burdens on pockets and relaxation for bodies too. The idea of early booking offer is supported by Bezzubtseva and Ignatov(2014). The first thing I did was plan my trip, reaping the most of it’s I invested my whole savings of the year.

Trip Schedule

As I am a student and planned vacations for Dubai at my own expense, I could hardly afford the city for 3-4 days because of the accommodation rates being so high, despite of being reduced (Grigolon and Kemperman, 2014). I know the city has a lot of landmarks to visit; I used Rayna tours, a trusted tourist guide to make my trip memorable and budget-friendly. I had no compromise on quality so I opted for the best airlines to reach my destination safely, though the air fares were bit higher at this time of year.

I booked for the whole package through online Rayna.com tours. They provided the best package of nominal rates to enjoy the landmarks of the city. I made an online booking at the start of May to reap the savings offered because due to high demand and lucrative discounts, no more air tickets are offered. It booked air line through Emirates for being the best and most reliable airline as supported by Lenin(2016).

The city is best to travel any time of the year except at the time of their religious occasions like eid-ul-fitr or any other festivals like Christmas due to crowd and high fares. The city had no heat of Dubai festival which increases the fares far beyond my reach. This time of the year was also comparatively higher than other seasons because of summer vacations but still better than Dubai Festival season. At this time of year. Hotels due to demand elasticity, collectively offers packages with reduced rates, somewhat, greater or lesser than others. It also increases its revenues through low price or discount offers like early birds or summer bonanza packages to make your trip worthier. At this time of year, hotel industry caters millions of tourists and knows the demand of hotels services, will give power to the hotels to offer rates not very high or low from each other generally, if of their own same international levels.(Alhosani and Zaidan, 2014)

The manager implemented the policy of monopoly because they are very well aware that the foreigners like me cannot afford compromise on quality and will demand better service and safety.( PAtIAr, Davidson and  WAnG, 2012), Manager has already offer low package in collaboration with the tourist company, as they had realized that this time of year will be tourist time and the tourists will demand rooms for stay. But to retain their trust and knowing tourist psychic they offered discount offers to be budget friendly. Managers have planned for the customers but they have managed to maintain their monopolistic accommodation rents behind.

Methodology of Trip

Conclusion:

The city is truly a city of superlatives, which can be afforded by the professionals and not very much by the students. The city has great demand of hotels due to high inflow of customers all year round, so they have maintained their monopoly in markets. They charge their prices according to their wishes under the blankets of budget-friendly, early packages and various other packages. Though, they have maintained their key position in the industries for being the only resort for tourists. The packages though offered are planned for customers’ pockets but they do not present the same motives behind as they appear in front.

References:

Alhosani, N. and Zaidan, E., 2014. Shopping tourism and destination development: Dubai as a case study. The Arab World Geographer, 17(1), pp.66-81. 

Anderson, E., D. Simester. 2010. Price stickiness and customer antagonism. Quarterly

Journal of Economics, 125(2), 729-765 

Balaguer, J. and Pernías, J.C., 2013. Relationship between spatial agglomeration and hotel prices. Evidence from business and tourism consumers. Tourism Management, 36, pp.391-400. 

Bezzubtseva, A. and Ignatov, D.I., 2013, December. The Early Booking Effect and Other Determinants of Hotel Room Prices in Europe. In Data Mining Workshops (ICDMW), 2013 IEEE 13th International Conference on (pp. 426-432). IEEE. 

Courty, P. and Pagliero, M., 2012. The Impact of Price discrimination on Revenue: Evidence from the concert industry. Review of Economics and Statistics, 94(1), pp.359-369. 

Grigolon, A.B., Kemperman, A.D. and Timmermans, H.J., 2012. The influence of low-fare airlines on vacation choices of students: Results of a stated portfolio choice experiment. Tourism Management, 33(5), pp.1174-1184. 

Lenin, K., 2016. A Study on the Air Cargo Logistics Operations in Dubai. Global Journal For Research Analysis, 4(5). 

Monsef, N.A., Al Hajaj, K.E., Al Basti, A.K., Al Marzouqi, E.A., Al Faisal, W., Hussein, H., Abdul Rahim, W.M.S., El Sawaf, E.M. and Wasfy, A.S., 2015. Perceived Depression, Anxiety and Stress Among Dubai Health Authority Residents, Dubai, UAE. American Journal of Psychology and Cognitive Science, 1(3), pp.75-82. 

PAtIAr, A., Davidson, M.C. and WAnG, Y., 2012. Competition, total quality management practices, and performance: evidence from upscale hotels. Tourism Analysis, 17(2), pp.195-211. 

Sharma, A. and Lambert, D.M., 2013. Segmentation of markets based on customer service. International Journal of Physical Distribution & Logistics Management. 

Wu, C.C., Liu, Y.F., Chen, Y.J. and Wang, C.J., 2012. Consumer responses to price discrimination: Discriminating bases, inequality status, and information disclosure timing influences. Journal of Business Research, 65(1), pp.106-116.

Zhelobodko, E., Kokovin, S., Parenti, M. and Thisse, J.F., 2012. Monopolistic competition: Beyond the constant elasticity of substitution. Econometrica, 80(6), pp.2765-2784.