Assess whether providing luxury seats is the best way for cinemas to increase added value. - Edexcel - A-Level Business - Question 1 - 2022 - Paper 3

Luxury seating allows cinemas to charge higher prices, creating a potential increase in revenue. This approach enhances the customer experience and could lead to additional purchases of snacks and drinks, which contributes to profitability. Furthermore, the assurance that non-refundable advance booking minimizes losses from no-shows.

Although luxury seating may initially seem beneficial, it may not always result in increased revenue due to the price elasticity of demand. If demand is elastic, customers might be deterred by higher prices. Additionally, profits may not significantly increase in the short term owing to high installation costs and maintenance.

While luxury seating can enhance the movie-going experience, it may not suit all audiences. Factors such as the popularity of the film and the availability of at-home viewing options through OTT platforms may influence customer behavior. If a movie is available for home viewing, many may opt to stay in, negating the need for luxury seating experiences. Thus, while luxury seating can increase added value, its effectiveness may vary based on market conditions and individual preferences.