A CA resort offers year-round activities and the resort's operating costs are essentially the same in winter and summer. Mgmt charges higher nightly rates in the winter, when its average occupancy rate is 75%, than in the summer, when its occupancy rate is 85%.

My question is, this can also be consistent with profit maximization, correct?

Yes, it is possible for the resort to maximize its profit by charging higher nightly rates in the winter and lower rates in the summer, despite the difference in occupancy rates. To understand why, let's break it down.

Profit is determined by the difference between revenue and cost. In this scenario, the resort's operating costs remain the same throughout the year. Therefore, to maximize profit, the resort needs to focus on increasing revenue.

By charging higher nightly rates in the winter, when the occupancy rate is 75%, the resort can generate higher revenue per occupied room compared to the summer. Although the occupancy rate is lower in the winter, the higher rates can potentially compensate for the lower occupancy by increasing the revenue per room.

On the other hand, in the summer, when the occupancy rate is 85%, the lower nightly rates may result in a higher number of occupied rooms, generating more revenue overall despite the lower rate.

To determine if this approach is consistent with profit maximization, the resort would need to calculate the revenue earned during both seasons and compare it to the operating costs. If the revenue generated outweighs the costs, the resort would be maximizing its profit. It is essential to consider various factors, such as customer demand, market conditions, and competition while making pricing decisions.

It's important to note that this explanation provides a general framework, and actual profit maximization would involve a more detailed analysis specific to the resort and its market.