QUESTION 8 14 points Save Answer The Victoria Hotel currenty operates at 70% occ

Question

QUESTION 8 14 points Save Answer The Victoria Hotel currenty operates at 70% occupancy, using a rack rate for al rooms of $162 and a variable cost per room sold of S18. Scenario 1: Calculate the equivalent room occupancy using discount percentages of 8%, 13%, 18%, and 23%. 8%: Discount 13%: Discount 18% Discount 23%: Scenario 2: at60% occupancy, using a rack rate for all rooms of $162 and a variable cost per room sold of $18 Calculate the equivalent room occupancy using discount percentages of 8%, 13%, and 18%. 8%: 13%: Discount 18%:

Explanation / Answer

Answer:

Scenario:1

Equivalent Occupancy = (Current Occupancy Percentage) * ((Rack Rate – Marginal Cost) / (Rack Rate * ((1 – Discount Percentage)) – Marginal Cost)

If discount is 8%.

Equivalent Occupancy = (70%)*((162-18)/(162*((1-0.08))-18)

=0.70*((144/131.04))

=0.769 or 76.9%

If discount is 13%.

Equivalent Occupancy = (70%)*((162-18)/(162*((1-0.13))-18)

=0.70*((144/122.94))

=0.8199 or 81.99%

If discount is 18%.

Equivalent Occupancy = (70%)*((162-18)/(162*((1-0.18))-18)

=0.70*((144/114.84))

=0.8777 or 87.77%

If discount is 23%.

Equivalent Occupancy = (70%)*((162-18)/(162*((1-0.23))-18)

=0.70*((144/106.74))

=0.94.44 or 94.44%

Scenario 2:

If discount is 8%.

Equivalent Occupancy = (60%)*((162-18)/(162*((1-0.08))-18)

=0.60*((144/131.04))

=0.6593 or 65.93%

If discount is 13%.

Equivalent Occupancy = (60%)*((162-18)/(162*((1-0.13))-18)

=0.60*((144/122.94))

=0.7027 or 70.27%

If discount is 18%.

Equivalent Occupancy = (60%)*((162-18)/(162*((1-0.18))-18)

=0.60*((144/114.84))

=0.7523 or 75.23%

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