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could you help me to fill the blanks? PMI, #3 and #4. Background Michelle has been working in the finance department of her company for
could you help me to fill the blanks? PMI, #3 and #4.
Background Michelle has been working in the finance department of her company for 2 years. Yesterday her boss Janet informed her that they were wrapping up a final proposal on a new Residence Inn in Chesterfield, a tertiary market of St. Louis, Missouri. The original plans included a small kitchen and staging area to be used by outside caterers to deliver and prepare food for the meeting space. Janet was starting to question whether or not outsourcing was the best alternative. Consequently, she asked Michelle if she could prepare 2 capital budgets comparing the costs and benefits of both in-house and out-sourced catering for the new property. To help Janet get started she provided the information below gathered from other company-owned hotel franchises. 1: Determine the average annual revenue per square feet for hotels that provide in-house or outsourced catering services. (4 pts) Midwestern hotels in tertiary markets In House Catering Sq Feet Annual Revenue Annual Revenue/Sq Foot Hyatt Place Hyatt House Hilton Garden Inn Embassy Suites Hampton Inn Courtyard by Marriott Residence Inn Springhill Suites Weighted Average In-House Weighted Average Out-Sourced 3400 1800 3200 6800 2400 3500 2900 4100 17500 10600 $450,000 $117,000 $377,000 $888,000 $152,000 $174,000 $191,000 509,000 2224000 634000 $132.35 $65.00 $117.81 $130.59 $63.33 $49.71 $65.86 124.15 $127.09 S59.81 Out Sourced 3500 10% 4% 30% 70% Revenue Assumptions Total Meeting Space (Sq Feet) Revenue Growth Rate (Years 2 through 4) Revenue Growth Rate (Years 5+) Revenue from food Revenue from room rental and AV In-House 3500 10% 4% 65% 35% Out Sourced $60,000 $70,000 $10,000 0% S0 $35,000 Cost Assumptions Depreciable Assets (3 Years) Depreciable Assets (7 Years) Salvage value of all assets at time 7 Food Cost (as a % of food revenue) Executive Chef Salary Events Manager Salary In-House $80,000 $180,000 $20,000 32% $40,000 $35,000Step by Step Solution
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