Wayne Jules is considering investing in a new hotel in the southeastern United States. You are asked to assist him in determining the number of new hotel rooms that could be supported by the area where the new hotel would be built, given the following information:

Current Competitive Number Average Daily Lodging Properties of Rooms Occupancy Hyatt Inn 150 78% Holiday Hotel 200 84% Quality Motel 100 75%

Expected annual growth in demand for the next 5 years by market segment is as follows:

Percent of Total Annual Compound Growth Business 80% 5% Convention 10% 4% Tourist 10% 2%

Assume that a 70% daily occupancy is normal for this area (that is, a hotel should be profitable at 70%).

Required:

1. What is the average daily demand for room nights at this time?

2. What is the average annual growth rate?

3. What is the projected average daily demand 5 years hence?

I . Based on the above information, calculate how many more rooms the en- tire area could support and still achieve a 70% daily occupancy in 5 years.