Westley Fong, manager of The Lucky 88 Motel, has a contract with Appraisers Associates to appraise his
Question:
Westley Fong, manager of The Lucky 88 Motel, has a contract with Appraisers Associates to appraise his 150-room motel, which is located in beautiful downtown Wahiawa. The consultant on the job has determined the following:
1. Occupancy percentages for the most recent year were as follows:
Daily occupancy % = 80%
Double (i.e., 2 people per room) occupancy % = 40%
* Average occupancy per room = 1.5 (use this only as a double check, not in a formula)
2. Average room rates were as follows:
Single rooms = $185.00
Double rooms = $225.00
3. Room expenses were as follows:
Labor--fixed = $105,000
Labor--variable = 15% of room sales
Other variable expenses = 5.5% of room sales
4. Food sales for the most recent year were as follows:
a. Breakfast:
- 60% of guests staying in singles dined in the motel's restaurant
- 40% of guests staying in doubles dined in the motel's restaurant
- The average check was $14.95
- And average of 10 breakfast guests per day were non-room guests
b. Lunch:
- 20% of the hotel guests used the facilities
- 60% of lunch guests were non-room guests
- The average check was $19.79
c. Dinner
- 30% of guests staying in singles dined in the restaurant
- 10% of guests staying in doubles dined in the restaurant
- 20% of dinner guests were non-room guests
- The average check was $32.64
5. The food service expenses for a recent year were as follows:
a. Cost of sales: 35%
b. Labor: fixed = $75,000, variable = 17.5% of food sales
c. Other: fixed = $17,500, variable = 15% of food sales
6. Telephone sales and expenses for the most recent year were as follows:
a. Telephone sales were 4% of total revenue (NOT room + f&b) of the motel
b. Telephone expenses were 95% of telephone sales
7. Other expenses of the motel were as follows:
| Fixed Expenses | Variable (% of Total Revenues) | |
| Administrative & general | $125,000 | 4% |
| Marketing | 78,000 | 3% |
| Property operation & maintenance | 60,000 | 5% |
| Utilities | 12,500 | 2.5% |
| Insurance | 25,000 | -- |
| Property taxes | 30,000 | -- |
| Rent | 15,000 | -- |
Required:
1. Prepare an operations statement for the most recent year (2020) based on the above information.
2. Leave columns available for forecasting years 2021-2025.
Expert Answer:
Operations Statement for the year 20x0 Operations Statement Lucky 88 Hotel for year 20x0 Yearly Mentioned in Dollars Revenue Revenue from Room Occupancy Single Rooms 8541000 Double Rooms 2682750 Total ... View the full answer
