Using the hubbart room rate formula, compute the average daily rate per occupied room that is required to cover the costs of operation and provide a fair return on the hotel investment. use the following data, some of which may be and some of which may be useless:
total operating expenses$ 1,200,000
total taxes, insurance & depreciation 150,000
reasonable return on the fair value of the property 1,000,000
net profit from food & beverage areas 1,400,000
loss from spa and health club 80,000
net profit from store rentals 30,000
other miscellaneous profits 100,000
this is a 75-room hotel
anticipated occupancy is 70 percent for the year
the answer is:
1. hubbart rate is $206.65
2. hubbart rate is $84.00
3. hubbart rate is $62.62
4. hubbart rate is $46.97
5. none of the above