A 100-room business hotel had an ADR of $90.00 with occupancy of 70.00% every day in 2011. Assume that the hotel's annual FC is $400,000 and its VC is $512,000 in 2011. In 2012, the management foresees an increase in ADR by $10.00 and a decrease in the occupancy % to 60.00%. Based on the information given, what is the annual decrease or increase in occupancy % at breakeven in 2012 over 2011 (assume that there are 365 days in a year and there is no change in VC in 2012)?

A 100-room business hotel had an ADR of $90.00 with occupancy of 70.00% every day in 2011. Assume that the hotel's annual FC is $400,000 and its VC is $512,000 in 2011. In 2012, the management foresees an increase in ADR by $10.00 and a decrease in the occupancy % to 60.00%. Based on the information given, what is the annual decrease or increase in occupancy % at breakeven in 2012 over 2011 (assume that there are 365 days in a year and there is no change in VC in 2012)?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 15P

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