A hotel in Hawaii charges its hotel guests premium prices for food at its in-house restaurant.As the guests are unaware of lower-priced restaurants in the area,they are often seen to be less price-sensitive than the locals.Which of the factors that affect customers' sensitivity to pricebest explains the lower price-sensitivity of outsiders?

Question

Quizplus · Accepted Answer

The lower price-sensitivity of outsiders (hotel guests) is best explained by the substitute-awareness effect. This effect occurs because the guests are not aware of alternative dining options in the area that may offer lower prices, making them less sensitive to the higher prices charged by the hotel's in-house restaurant.

A Hotel in Hawaii Charges Its Hotel Guests Premium Prices