Visit a local hotel and observe its daily operating activities. The costs associated with some of its activities are variable while others are fixed with respect to occupancy levels.

Required 1. List costs that are likely variable for the hotel.

2. List costs that are likely fixed for the hotel.

3. Using your lists from parts 1 and 2, which type of costs (fixed or variable) is likely to be larger (in dollars)?

4. Based on your observations and the answers to parts 1 through 3, explain why many hotels offer discounts as high as 50% or more during their low occupancy season.