Chapter 8, Question 1 Step 1. Calculate the hotels target before-tax net income.

Owner's investment ROI After-Tax Net Income After-Tax Net Income Tax Before-Tax Net Income Step 2. Calculate estimated nonoperating expenses. Mortgage Other Nonoperating Expenses Total Nonoperating Expenses Step 3. Calculate estimated undistributed operating expenses. Undistributed Operating Expenses Step 4. Calculate estimated operated departments income excluding rooms. F&B Operating Income Other Non-Rooms Income Total Non-Rooms Operating Income Step 5. Calculate the operated department income for rooms. Chapter 8 Q1 75,000 50,000 125,000 1,000,000 750,000 250,000 1,000,000 8,000,000 15% 1,200,000 1,200,000 40% 2,000,000

Before-Tax Net Income Non-Operating Expenses Undistributed Operating Expenses Total Non-Rooms Operating Income Rooms Operated Department Income

2,000,000 1,000,000 1,000,000 -125,000 3,875,000

Step 6. Calculate the estimated rooms department revenues based on estimated occupancy. Rooms Days in Period Occupancy % Total Rooms Total Rooms Expense per Room Total Room Expenses Rooms Operated Department Income Total Room Expenses Rooms Revenue Step 7. Calculate the hotel's required ADR. Rooms Revenue Total Rooms ADR 6,174,500 51,100 $120.83 200 365 70% 51,100 51,100 45 2,299,500 3,875,000 2,299,500 6,174,500

a. Chapter 8 Q1

ADR with 12% ROI

$123.20

b. c. d.

ADR with 15% ROI ADR with 15% ROI and 70% Occ% ADR with 15% ROI and 70% Occ% and $75,000 F&B Operating Income

$132.33 $119.85 $120.83

Chapter 8 Q1

Chapter 8, Question 2 Calculate the net ADR Yield percentages for the following distribution channels:

Distribution Channel Third-party Internet Sales Franchisor Delivered Sales Travel Agent Sales Walk-Ins

Room Rate $167.95 $165.90 $151.50 $149.95

Fees Net ADR Yield $28.00 $8.00 $15.00 $0.00 83% 95% 90% 100%

a. What is the net ADR yield on rooms delivered via the hotels third-party Internet partners? b. What is the net ADR yield on rooms delivered via the hotels franchisor? c. What is the net ADR yield on rooms delivered via travel agents? d. What is the net ADR yield on rooms sold to walk-ins? Answers: a. 83% b. 95% c. 90%

d. 100%

Chapter 8 Q2

Chapter 8, Question 3 Thandi's Hotel 250 rooms Day Monday Tuesday Wednesday Thursday Friday Five Day Total Rooms Sold 205 230 226 228 195 1,084 ADR $117.21 135.45 131.25 132.22 115.21 126.80 Occ % 82.0% 92.0% 90.4% 91.2% 78.0% 86.7% RevPAR $96.11 124.61 118.65 120.58 89.86 109.96 Rooms Sold 158 249 230 248 138 1,023 Darla's Hotel 250 rooms ADR $99.11 89.53 91.14 92.15 101.51 93.67 Occ % 63.2% 99.6% 92.0% 99.2% 55.2% 81.8% RevPAR $62.64 89.17 83.85 91.41 56.03 76.62

a. What was Thandis RevPar on Monday?

b. What was Darlas ADR on Monday?

c. What was Darlas occupancy % on Wednesday? d. What was Thandis occupancy % on Thursday? e. What was Thandis ADR on Friday? f. What was Darlas occupancy % on Friday? g. How many rooms did Thandi sell during the five days? h. What was Thandis occupancy% for the five days? i. What was Thandis five day RevPAR total? j. How many rooms did Darla sell during the five days? Chapter 8 Q3

j. How many rooms did Darla sell during the five days? k. What was Darlas ADR for the five day period? l. Did Thandi or Darla have a higher RevPAR during this five-day period? What do you think was the reason for this difference? Answers: a. b. c. d. $96.11 $99.11 92.0% 91.2%

e. $115.21 f. 55.2% g. 1084 h. 86.7% i. $109.96

j. 1023
k. 93.67 l. thandi. because of higher ADR and higher overall occupancy %

Chapter 8 Q3

Chapter 8 Q3

Chapter 8, Question 4 The Carlton Hotel Income Statements For October 2009 and 2010 October Last Year 2009 Revenue Rooms Non Rooms Total Revenue Operated Department Expenses Rooms Non-Rooms Total Operated Department Expenses Total Operated Department Income Total Undistributed Operating Expenses Gross Operating Profit Rent, Property Taxes, and Insurance Depreciation and Amortization Net Operating Income Interest Income Before Income Taxes Income Taxes Net Income Flow Through a. What were the total revenues in October 2009 and October 2010? b. What was the GOP in dollars in October 2009 and October 2010? Chapter 8 Q4 430,000 115,000 545,000 October This Year 2010 465,000 118,000 583,000

% 78.90% 21.10% 100.00%

% 79.76% 20.24% 100.00%

87,000 127,500 214,500 330,500 168,500 162,000 14,210 10,925 136,865 9,800 127,065 64,896 62,169

15.96% 23.39% 39.36% 60.64% 30.92% 29.72% 2.61% 2.00% 25.11% 1.80% 23.31% 11.91% 11.41%

97,500 123,000 220,500 362,500 177,950 184,550 15,100 11,500 157,950 10,100 147,850 67,104 80,746

16.72% 21.10% 37.82% 62.18% 30.52% 31.66% 2.59% 1.97% 27.09% 1.73% 25.36% 11.51% 13.85% 0.593421

b. What was the GOP in dollars in October 2009 and October 2010? c. What was the percentage of GOP to total revenues in October 2009 and October 2010? d. What was the flow-through percentage achieved by Santis hotel? What is your assessment of that percentage? Answers: a. 545,000 and 583,000 respectively

b. 162,000 and 184,550 respectively c. 29.72% and 31.66% respectively

d. 59.34%. The Carlton Hotel efficiently converted their additional revenues into additional profit.

Chapter 8 Q4

Chapter 8 Q4

additional

Chapter 8 Q4