HTM 241 Name: Occupancy rate 75% $12 Expected after-tax return 12% EX6-2: Bottom-up pricing for hotel rooms The following information is given about a motel. Room number: 70 Double occupancy rate 40% Spread between double and single room rates Owners' equity $400,000 Tax rate 35% Mortgage $800,000 Building's net book value $1,200,000 Furniture and equip. Other fixed costs $150,000 GM's salary $80,000 Room variable costs 60% Interest rate Depreciation rate Depreciation rate 12% 10% 20% 1. Use the bottom-up approach to find the required sales revenue to cover the costs and expected profits. Rev 2. What is the required average room rate? 3. What are the single and double room rates? HTM 241 Name: Occupancy rate 75% $12 Expected after-tax return 12% EX6-2: Bottom-up pricing for hotel rooms The following information is given about a motel. Room number: 70 Double occupancy rate 40% Spread between double and single room rates Owners' equity $400,000 Tax rate 35% Mortgage $800,000 Building's net book value $1,200,000 Furniture and equip. Other fixed costs $150,000 GM's salary $80,000 Room variable costs 60% Interest rate Depreciation rate Depreciation rate 12% 10% 20% 1. Use the bottom-up approach to find the required sales revenue to cover the costs and expected profits. Rev 2. What is the required average room rate? 3. What are the single and double room rates