Question

Statement I: When calculating the average daily rates of a hotel, we do not have to...

Statement I:

When calculating the average daily rates of a hotel, we do not have to consider the complimentary rooms.

Statement II:
The average daily rates of a hotel is equal to its occupancy rate divided by its revenue per available room.

Both statements are incorrect
Statement 1 is incorrect; statement 2 is correct
Both statements are correct
Statement 1 is correct; statement 2 is incorrect
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Homework Answers

Answer #1

The given statement 1 is correct but the statement is incorrect.

Average Daily Rate (ADR) or Average Room Rate (ARR) is a measure of the average rate paid for the rooms sold, calculated by dividing total room revenue by rooms sold. Some hotels calculate ADr or ARR by also including the complimentary rooms this is called as Hotel room rate. Therefore for calculating the average daily rates of a hotel, we do not have to consider the complimentary rooms.

Revenue per available room is calculated by multiplying a hotel's average daily rate (ADR) by its occupancy rate. Thus Average daily rate is equal to revenue per available room divided by its occupancy rate. Hence the statement 2 is incorrect.

Therefore the correct answer is d) Statement 1 is correct; statement 2 is incorrect.

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