The Crystal Coast Ocean Resort (CCOR) is a large, family-owned resort located on

Question

The Crystal Coast Ocean Resort (CCOR) is a large, family-owned resort located on one of the finest beaches in North Carolina. The Resort is locally called the "Ramada Inn: Crystal Coast Ocean Resort", because it has a contractual relationship with Ramada Inn, Inc which requires Ramada to provide reservation services and certain marketing services. In turn CCOR pays an annual fee to Ramada and displays the Ramada Inn sign. Ramada has the right, under contract, to require CCOR to meet Ramada standards for resort services, cleanliness, etc, and regularly visits CCOR to make sure that these standards are being met. CCOR's main building has a T-configuration, where the top of the T is road-side and the bottom of the T is at the beach. This allows all rooms to have at least a partial view of the beach. There are five types of rooms for guests, ocean front (actually facing the ocean, at the bottom of the T), ocean view (along the sides of the T), pool side (first floor, with patios having direct access to the pool), and one and two bedroom suites that are located at the top of the T. These rooms are distributed as follows. No. of Rooms Ocean front Ocean view Pool Side One Bedroom Suite Two Bedroom Suite 50 250 20 30 25 375 The season for CCOR is year-round because of the mild winters, though the occupancy rates vary from 100% during the summer months to less than 50% in the winter months. The average annual occupancy rate for each type of rooms is 80%, 75%, 60%, 50% and 50% for the ocean front, ocean view, pool side, one room and two room suites, respectively Because the Resort is popular with families, the average number of persons per room is greater than for some other motels or hotels. The average number of occupants is three for the ocean front, ocean view, and pool side rooms, four for the one bedroom suite, and 6 for the two bedroom suite. The suite are also somewhat larger, 500 square feet for the one bedroom suite, and 900 square feet for the two bedroom suite, while all other room are 300 square feet. CCOR does not have some of the amenities of competing resorts, but instead competes on value pricing and reliable service. It does not offer special services such as room service, exercise room, restaurant, or lounge but it sets high standards for room cleanliness and for the appearance and cleanliness of the pool and grounds. Also, CCOR offer a free breakfast and a free afternoon snack. Because of high demand in summer months, CCOR sets relatively high market prices during this season, ranging from $125 to $350 per room depending on room type and day of week Prices are lower in the fall and spring, and substantially lower in the winter. In order to have better information about price setting and profitability analysis for each of the five room

Explanation / Answer

As per the Template Given Resources Per Year Facilities Cost-Utilities 210000 Other Facilities Costs Depreciation 800000 Tax 500000 Interest 600000 Total 1900000 Gen & Admn. Accounting 165000 Gen & Admn. 155000 Purchasing & HR 88000 Total 408000 Hotel Operations Wages 1500000 Supplies 180000 Equipment & repair 240000 Total 1920000 Resources to activities Activities Utilities Other Facilities Gen& Admn. Operations Housekeeping 5% 5% 20% Laundry 10% 10% 10% Grounds & Pool 40% 20% 10% Registration 15% 20% Breakfast Room 10% 15% 10% Administration 5% 20% 0% Security 5% 10% 10% Room rep. & Maint. 10% 20% 20% Utilities 100% 0% 0% 0% Total 100% 100% 100% 100% External units (Direct costs) Ocean front Oceanview Poolside 1 Room 2 Room Kitchenware Repl/rep 0 0 0 2.5 5 Complementary tioletries 2.5 2.5 2.5 3.5 6 Complementary coffee& tea 3 3 3 5 8 No.of rooms Av.Occupancy Av.Persons/rm Room size(sq.ft) Ocean front 50 80% 3 300 Oceanview 250 75% 3 300 Poolside 50 60% 3 300 1 Room 30 50% 4 500 2 Room 25 50% 6 900 Crystal Coast Ocean Resort Ocean front Oceanview Poolside 1 Room 2 Room Total No.of rooms 50 250 50 30 25 405 Av.Occupancy 0.8 0.75 0.6 0.5 0.5 Total Room nights 40 187.5 30 15 12.5 285 Av.Persons/rm night 3 3 3 4 6 Total persons /room type 120 562.5 90 60 75 907.5 Room size(sq.ft) 300 300 300 500 900 Total sq.ft for /room type 36000 168750 27000 30000 67500 329250 First stage allocation: Allocate resources to activities Utilities Other Facilities Gen& Admn. Operations Total assigned 210000 1900000 408000 1920000 4438000 Resource consumption Activities Utilities Other Facilities Gen& Admn. Operations Housekeeping 5% 5% 20% Laundry 10% 10% 10% Grounds & Pool 40% 20% 10% Registration 15% 20% Breakfast Room 10% 15% 10% Administration 5% 20% 0% Security 5% 10% 10% Room rep. & Maint. 10% 20% 20% Utilities 100% 0% 0% 0% Total 100% 100% 100% 100% Second:Allocate Resource to Activities Using Resource Consumption Drivers Utilities Other Facilities Gen& Admn. Operations Total Activity consumption Activities Cost Driver Housekeeping 95000 20400 384000 499400 Sq.ft Laundry 190000 40800 192000 422800 per occupant Grounds & Pool 760000 81600 192000 1033600 per Room Registration 285000 0 384000 669000 per Room night Breakfast Room 190000 61200 192000 443200 per occupant Administration 95000 81600 0 176600 per Room night Security 95000 40800 192000 327800 per Room Room rep. & Maint. 190000 81600 384000 655600 Sq.ft Utilities 210000 0 0 0 210000 Sq.ft Total 210000 1900000 408000 1920000 4438000 Second Stage Allocation:Allocate activity costs to Room types Cost Driver % of total for each room Type Ocean front Oceanview Poolside 1 Room 2 Room Total Total persons /room type 120 563 90 60 75 908 Total sq.ft for /room type 36000 168750 27000 30000 67500 329250 Total Room nights 40 187.5 30 15 12.5 285 No.of rooms 50 250 50 30 25 405 Second: Allocate activity costs to Room Types Activities Ocean front Oceanview Poolside 1 Room 2 Room Total Housekeeping 54604 255957 40953 45503 102383 499400 Laundry 55877 262155 41907 27938 34923 422800 Grounds & Pool 127605 638025 127605 76563 63802 1033600 Registration 93895 440132 70421 35211 29342 669000 Breakfast Room 58573 274804 43930 29286 36608 443200 Administration 24786 116184 18589 9295 7746 176600 Security 40469 202346 40469 24281 20235 327800 Room rep. & Maint. 71683 336014 53762 59736 134405 655600 Utilities 22961 107631 17221 19134 43052 210000 Total 550452 2633246 454858 326948 472496 4438000 Cost per occupied room---1 13761 14044 15162 21797 37800 Plus: Direct costs per Room Night Kitchenware Repl/rep 0 0 0 2.5 5 Complementary tioletries 2.5 2.5 2.5 3.5 6 Complementary coffee& tea 3 3 3 5 8 Direct costs Total Kitchenware Repl/rep 0 0 0 37.5 62.5 100 Complementary tioletries 100 468.75 75 52.5 75 771.25 Complementary coffee& tea 120 562.5 90 75 100 947.5 Total direct costs-----2 220 1031.25 165 165 237.5 1818.75 Total cost for each room type(1+2) 550672 2634277 455023 327113 472734 4439819 Total Cost per occupied room 13767 14049 15167 21808 37819 New room rates (1+300%) 41300 42148 45502 65423 113456 Rounded upto next $ 10 41300 42150 45510 65430 113460 Total revenue(*roomnight) 1652017 7903125 1365300 981450 1418250 13320142

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