Six competitive motor hotels have the following number of rooms and current occupancy rates.

a. Calculate the current average occupancy of the six motor hotels.

b. Calculate the composite rate of growth in demand.

c. Apply the composite growth rate to the demand figures to obtain projected demand for each of the next four years.

d. Assume the average room occupancy is 75% for the motor hotels in this area and is considered profitable. Assume also that Motor Hotel 3 is due to be demolished in Year 2 to make way for a new highway.
Calculate the future supply of rooms that could be supported for each of the next four years.LO1

Transcribed Image Text:

Motor Hotel Rooms 1 150 80% 2 140 90% 3 90 70% 4 110 80% 5 66 75% 6 120 75% Demand for rooms in the area where the motor hotels are located is bro- ken down into the following sources and growth rates: Source Percentage Growth Rate Business traveler 60% 6% Vacation traveler 30% 5% Other travelers 10% 4%