Pete Donelli has received an economic study from Consultants, Inc., for the 200-room hotel he wants to construct. The projections show the following for the rooms department:

20X1 20X2 20X3 20X4 20X5 Rooms department:

Occ. % 65% 68% 71% 74% 75%

ADR $55 $58 $60 $62 $64 Fixed costs $40,000 $45,000 $52,000 $61,000 $71,000 Variable costs 14% 13.5% 13% 13% 13%

Donelli has requested that they also calculate the rooms department income for the 5 years as follows:

m Assume the occupancy percentage is 2 percentage points lower each year and 2 percentage points higher each year.

= Assume the ADR is $2 lower each year and $2 higher each year.

# Assume variable costs are 1 percentage point higher each year and 1 percentage point lower each year.

Required:

1. Determine the rooms department income for years 20X1-20X5 based on the consulting firm’s original data.

2. Determine the rooms department income for years 20X1-20X5 based on the lower occupancy, lower ADR, and higher variable costs percentage.

3. Determine the rooms department income for years 20X1-20X5 based on the higher occupancy percentage, higher ADR, and lower variable costs percentage.