You are required to fill in the solution and submit the answers by attaching back the file in the discussion forum.

Q.1 The Hubbart Room Rate Formula

Operating Expenses 2,000,800

Taxes and Insurance 400,000

Depreciation 350,750

Reasonable ROA 900,000

Total __________________________

Less Income from other sources 340,000

Amount needed from room sales $ _________________________

Revenue from room sales needed $ ________________________

Number of rooms available (Per Day) 275

Rooms available per year (item 2x 365) __________________________

Less allowance for vacancies (@ 25%)________________________

Number of rooms to be sold (@75%) _______________________

ADR per room to get ROA (item1/item5) $ _____________________________________

Q.2 Square Foot Calculation

Use numbers from Q.1, but use square footage of room, not number of rooms

1. Hotel has 80,500 square feet in 275 rooms

2. @ 75% occupancy only _____________________sq.ft are occupied

3. Daily required return is $ _________________ (Room Revenue/365)

4. Each square foot must generate $ _________________ per day

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

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