Determining the Proper Room Rate $-$ In$-$class Assignment

Square Foot Calculation

Use numbers from Hubbart Formula, but use square footage of room, not number of rooms

Hotel has $80,500$ square feet in $275$ rooms

@ $75\%$ occupancy only Sq$.$ft are occupied

Daily required return is $

$($Room Revenue$/365)$

Each square foot must generate $ per day

A $300$ sq$.$ft room would sell for $

$(45)$

The Building Cost Room Rate Formula

The average room rate should equal $$1$ per $$1,000$ of construction cost

A $300$ room hotel, costing $$25$ million, should have a room rate of $

million $/$ rooms $\frac{?}{?}$$$1,000$

Similar calculations can be done to arrive at a return on investment for a major renovation project