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RACK
CORPORATE
GROUP
PROMOTIONAL
INCENTIVE
FAMILY
PACKAGE PLAN
COMPLIMENTARY
ESTABLISHING ROOM RATES
IN RELATION TO:
COSTS
FIXED/CONSTRUCTION/
OPERATING COSTS
INFLATION
COMPETITION
MARKET CONDITION
RULE OF THUMB
HUBBART FORMULA
MARKET CONDITION PRICING
EXAMPLE
Average construction
cost of room =$75000
IGNORES INFLATION
IGNORES OTHER
FACILITIES
IGNORES OCCUPANCY
HUBBART FORMULA
1. Calculate desired profit
2. Calculate pre-tax profits
3. Calculate fixed charges and
management fees
4. Calculate undistributed
operating expenses
5. Estimate non-room operated
department profit / loss
6. Calculate required rooms
department income
7. Determine rooms
department revenue
8. Calculate average room rate
USING THE HUBBART
FORMULA
To set target rather than actual
room prices
Reliant on management
estimates
Used in comparison to
competitors’ prices