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Homework answers / question archive / The operation team of H hotel, which has 25 rooms on daily basis, has projected that the occupancy will be 60
The operation team of H hotel, which has 25 rooms on daily basis, has projected that the occupancy will be 60.00% with total revenue of $620,000 and total expenses of $50,000 for the next year. The income tax bracket is 40.00%. Assume that there are only single and double rooms for H with a double occupancy of 70.00% and the double rooms are sold at a percentage markup of 20.00% over singles. Based on the information given, what are the individual ADRs for both single and double rooms for H hotel for the next year (assume that there are 365 days in a year)?
Total rooms= 25
Occupancy= 60%
Total revenue= $620000
Total expenses= $50000
Total revenue per day= $620000/365
= 1698.63
Revenue from occupied rooms=1698.63/ (25*60%)
= 113.24
Assume daily room rate of Single room is 'x' and double room is 'y'
Total room rate will be;
x+y= 113.24 .........................Equation 1
Room rate of 'y'=(x+x*20%) .................. Equation 2
Solving the above 2 equation (1)&(2)
=x+(x+x*20%) = 113.24
2x+.2x=113.24
x(2+.2)=113.24
x=113.24/2.2x
=51.47
So,
Room rent of single room 'x'= 51.47
Room rent of double room 'x'= =51.47(1+20%)
= 61.77
