Use supply and demand analysis to explain why hotel room rental rates near your campus during parents’ weekend and graduation weekend might differ from the rates charged during the rest of the year.
Supply remains the same; demand goes up. Hotel owners maximize profits by charging more, since there are plenty of people willing to pay a much higher price at that time. You can show it with S & D curves if you wish. Pretty basic stuff.
To explain the difference in hotel room rental rates near your campus during parents' weekend and graduation weekend compared to the rest of the year using supply and demand analysis, we need to consider a few factors.
1. Demand: Parents' weekend and graduation weekend are times when a large number of parents, relatives, and friends visit the campus to attend special events. The demand for hotel rooms increases significantly during these periods as visitors seek accommodation near the campus.
2. Supply: The supply of hotel rooms near your campus is relatively fixed and may not easily be expanded to meet the sudden surge in demand during parents' weekend and graduation weekend. Hotels have a limited number of rooms available, and it takes time and resources to construct new hotels or expand existing ones.
Based on these factors, we can see that during parents' weekend and graduation weekend, the demand for hotel rooms exceeds the supply, leading to an imbalance in the market. This imbalance affects hotel room rental rates in the following ways:
1. Higher prices: Due to the limited availability of rooms, hotels can charge higher rates during peak periods. This is because they know many visitors are willing to pay a premium to secure accommodation near the campus during these important events. The increased demand allows hotels to raise their prices and maximize their revenue.
2. Limited discounts and promotions: Hotels may offer fewer discounts or promotional deals during parents' weekend and graduation weekend because they are already benefiting from the high demand. They have less incentive to provide discounts since they know people are willing to pay higher prices.
3. Lower rates during the rest of the year: In contrast, during the regular academic year when there isn't a surge in demand, hotels may lower their rates to attract visitors. With less demand, hotels may need to offer competitive prices to fill their rooms and maintain profitability.
In conclusion, the fluctuation in hotel room rental rates during parents' weekend and graduation weekend compared to the rest of the year can be explained by the principles of supply and demand. Increased demand during these peak periods allows hotels to charge higher rates, while lower demand during other times of the year may lead to lower rates to attract guests.