This case is a continuation of the Burburr Resorts & Hotels Corporation serial case that began in Chapter 1. The components of the Burburr serial case can be completed in any order. Burburr Resorts & Hotels Corporation is a fictitious corporation.
The Las Vegas Burburr made headlines when it undertook a $150 million renovation. The hotel closed its Blue Tower, which was last updated in 2001, and started a major renovation of the 500 rooms housed in that tower. On January 1, 2021, the newly renovated Blue Tower reopened. In addition to renovating the existing rooms and suites in the Blue Tower, 50 guest rooms were added to the tower. With the renovation completed, Burburr expects the Blue Tower room rate to average around $200 per night. This increase, a $50 or 33% increase, reflects, in part, the room improvements.
Assume that the annual fixed operating costs for the Blue Tower in Las Vegas Burburr are $5,000,000. This amount represents an increase of $200,000 per year compared
to pre-renovation. Also assume that the variable cost per hotel room night after the renovation is $27; before the renovation, the variable cost per room night was $20.
Assume that the hotel occupancy rate for Burburr Resorts & Hotels Corporation is 92% and that the average hotel occupancy rate in Las Vegas overall is 88%.

Requirements
1. What cost types, associated with a hotel room in the Blue Tower, are variable with respect to hotel room occupancy? What cost types are fixed with respect to hotel
room occupancy?
2. Before the renovation, how many hotel room nights were needed to break even in the original Blue Tower? Using Burburr’s occupancy rate, what was the margin of safety in units before the renovation? What is the margin of safety in units if the Las Vegas hotel occupancy rate is used instead of Burburr’s occupancy rate?
3. After the renovation, how many hotel room nights are needed to break even in the Blue Tower? Using Burburr’s occupancy rate, what is the margin of safety in units after
the renovation? What is the margin of safety in units if the Las Vegas hotel occupancy rate is used instead of Burburr’s occupancy rate? Which hotel occupancy rate estimate is more appropriate in this case? Why?