You are Karla Bodden, general manager of Coral Bay Resort, a 140-room dive resort on Roatán, Honduras. A new rival across the point sells the same week for 700 dollars less, and this week you must set next year's prices for the high season and the low season.
The situation
It is Monday, 2 February 2026. Since 2005 Coral Bay has sold a single product: an all-inclusive week with lodging, meals and guided diving, priced in dollars per person. It holds 280 guests a week. The high season, December to April, lasts 22 weeks and fills to 95% at 2,500 dollars; the low season, May to November, lasts 30 weeks and reaches only 35% at 1,200 dollars. Variable costs take about a third of every dollar sold, and fixed costs of about 2.1 million a year do not fall when occupancy does.
In January a four-star resort opened across the point, with 80 rooms, an equally good beach and similar diving, selling all-inclusive packages at 1,800 dollars a week. It does not have Coral Bay's twenty years of knowledge of the dive sites, nor guides with that experience. Finance has run the numbers at the usual prices: occupancy would fall to 75% in the high season and 25% in the low, putting more than a fifth of the year's revenue at risk.
Your team does not agree. Denis McNab, the sales director, wants to move towards the rival's price before the agencies close their catalogues. Mirna Castro, the finance director, reminds you that almost every dollar of discount comes straight out of margin. Elvin Jackson, the head guide, keeps saying that serious divers pay for the sites, not the room. A January study says advanced divers, 40–50% of the market, look less at price; recreational divers compare actively. And at a quarter past seven a Texas tour operator calls: he wants 20% off for his March block, because the resort next door has already offered it.