Question

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)?

Answer 1

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Answer:

Particulars		Single room	Double room
Total rooms	25
occupancy	60%
Total revenue	$620000
Total expenses	$50000
Total revenue per day	=$620000/365
	1698.63
Revenue from occupied rooms (25*60%)	=1698.63/15
	113.24
the individual average daily room rates (ADRs)		51.47	61.77
Workings:
Let daily room rate of Single room is 'x' and double room is 'y'
Then, Total room rate	=x+y	113.24	Equation (a)
Room rate of 'y'	=(x+x*20%)	y	Equation (b)
Solving the above 2 equation (a)&(b)	=x+(x+x*20%) = 113.24
	2x+.2x=113.24
	x(2+.2)=113.24
	x=113.24/2.2
	x=51.47
Therefore,
Room rent of single room 'x'	51.47
Room rent of double room 'x'	=51.47(1+20%)	61.77