Fun Stay Express operates a 100-room hotel near a busy amusement park. During June, a 30-day month, Fun Stay Express experienced a 65% occupancy rate from Monday evening through Thursday evening (weeknights). On Friday through Sunday evenings (weekend nights), however,
Fun Stay Express offers free breakfast to guests. In June, there were an average of two breakfasts served per room-night on weeknights and 4 breakfasts served per room-night on weekend nights.
1. Calculate the average cost per room-night for June. What was Fun Stay Express operating income or loss for the month?
2. Gina Johnson estimates that if Fun Stay Express decreases the nightly rates to $ 75, weeknight occupancy will increase to 75%. She also estimates that if the hotel increases the nightly rate on weekend nights to $ 105, occupancy on those nights will remain at 90%. Would this be a good move for Fun Stay Express? Show your calculations.
3. Why would the guests tolerate a $ 30 price difference between weeknights and weekend nights?
4. A discount travel clearinghouse has approached Fun Stay Express with a proposal to offer last-minute deals on empty rooms on both weeknights and weekend nights. Assuming that there will be an average of three breakfasts served per night per room, what is the minimum price that Fun Stay Express could accept on the last-minuterooms?
Variable Cost Fixed Cost $25,000 per month $38,000 per month Depreciation Administrative costs Housekeeping and supplies $16,000 per month $ Breakfast per room-night $12,000 per month per breakfast served
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1 Guest nights on weeknights 18 weeknights 100 rooms 65 1170 Guest nights on weekend nights 12 weekend nights 100 rooms 90 1080 Total guest nights in …View the full answer
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