Question

Let's assume A Hotel has 900 rooms. The total fix costs for the hotel on any given night are 22350.The variable costs per rooms is 43. assume the average daily rate for hotel last night is 90. How many room have been sold be break-even last night? What percent of occupancy should have made to be break-even last night?

Answer 1

unit revenue= $90

Fixed cost= 22350

Variable cost= 43 per room

Let the total rooms be x, then the total profit will be Y

Total profit= Profit per room*x - Fixed cost

Y= 47*x – 22350

For breakeven total profit= 0,

47*x= 22350

Breakeven is, X= 475.5 rooms

Total rooms= 900

Required occupancy % for breakeven= 475.5/900= 0.5283 or 52.83%