In this memo, I will discuss my experience in playing the Hotel Game.

In the Hotel Game, the price depends on the supply and demand. I wanted to sell all of my rooms, because having unsold rooms would mean lost revenue opportunity. The supply in the market was always 10,000 rooms. I needed to make sure that I did not price higher than my competitors since the lower priced rooms would be filled up first.

My costs may not rises, but if the demand for my hotel rooms rise because of the season, I would raise my prices to get the best bang for my buck, or the highest returns.

Rooms are guaranteed to be sold if priced at the market clearing price, the price that is found from setting demand equal to market quantity. Pricing lower would mean losing money, since you would miss out on full profit potential. However, pricing lower does mean that your rooms are sold first. For low seasons, I priced one cent lower than the market clearing price because I prefer to be conservative. If you bid above the market clearing price, you risk not selling your rooms. If everyone prices at the market clearing price or below, you would not sell your rooms. If others price above the market clearing price, you may be successful.

In my first turn, I did not have a clear strategy. I predicted that others would price above the costs for each hotel room, which was $74.99. I was also mistaken; I had thought the first round was for the low season. If I had known that it was a low season, I would have priced lower than my costs, and take a loss. Taking a loss for a low season would actually be taking a gain, because if you price too high and try to aim for a gain, you would have unsold rooms, resulting in a huge loss.

Through time, I would differentiate my hotel if I had that opportunity. I’d promote my hotel brand, and make it well-known throughout the country and perhaps the world.