Question
For this assignment, you are starting to look at some options to increase revenues at the Happiness Hotel. So far, you have come up with
For this assignment, you are starting to look at some options to increase revenues at the Happiness Hotel.
So far, you have come up with three plans:
Catering
Because you have limited banquet room space, you need to focus on smaller groups - typically 45 people or less. You have worked out a "Shower" package. You will advertise this to various local wedding and baby marketing channels. The package will give the honoree a banquet room, hot and cold tea, non-alcoholic drinks, tea sandwiches, small finger desserts, and the necessary table and chair set up to host a small shower for about 40 people. You will include some basic decorations and work to coordinate the linens to match guest preferences. You have figured that you will need to spend about $3500 (fixed costs) on advertising and equipment for this package. Your chef and catering manager estimates the variable cost for this type of event runs about 45%. Based on a review of competitors, you think you can charge between $35 and $50 per person for this type of event, most like $45 per person.
Room
As your hotel is located near a tourist attraction which does not seem to generate any room sales, you are going to work up a deal. Guests can book a hotel room and get two free tickets to the Tourist Attraction (a $150 value). You will also include one free breakfast.
You estimate that your variable costs are 58% (including the Attraction Tickets) and you will need to spend about $4000 in co-operative advertising and other fixed costs. You estimate that you can charge roughly $140 per room per night for this package - slightly above your regular average rate of $115.
Food
Your chef has proposed adding a new menu to the dinner caf. On Sunday (the slowest day for food), he will feature international foods from a different county each week. He will set up a buffet line with at least two appetizers, three entrees, four sides, three desserts, and a non-alcoholic beverage from that country. To increase the number of customers (the caf can only seat 25 people), he will open up the banquet room temporarily increasing the capacity to 60 people.
The chef estimates that he will need about $5000 to cover advertising in local media and specialty equipment. He also estimates that the variable costs would be about 38% for the menus. And, while the current average check at dinner runs about $28, he thinks he would draw in locals pricing it between $20 and $22. He would have the buffet open from 11:30 to 4pm, theoretically allowing for 3 turns of each seat.
For this assignment, please complete the following - Use the Template to help you figure out the details.
A) - calculate out the breakeven point separately, for each of the three options. Figure out how many people/sales you will need to breakeven for this package. For the packages with multiple price points, use the highest, lowest, and what is given.
B)- Suppose you have $6000 in seed money. Which package(s) would you choose based upon financial criteria only? Why did you select them? If you only have $2000 which one would you choose?
C) - what information do you feel is missing to make an informed decision about the packages. List the missing information for each package separately.
AutoSave On ly Happiness Hotel Rev May 2022 . Last Modified: Mon at 5:25 PM v Search Danyell Hutchins DH X File Home Insert Page Layout Formulas Data Review View Help Comments Share LO Calibri 11 ~ A A E = = ab Wrap Text Accounting Ex AY O Paste BIU~ Merge & Center $ ~ % " Conditional Format as Cell Insert Delete Format Sort & Find & Analyze Formatting * Table Styles Filter * Select v Data Clipboard Font Alignment Number Styles Cells Editing Analysis B4 X V fe 3500 A B C D E F G H J K L M N P R S T U 3 Catering Breakeven Point 4 Fixed Costs $ 3,500.00 5 Price per Person $45.00 6 Variable Cost Pct 45.00% 7 Variable cost dollar 8 CM % 9 BE point Catering Events 10 11 Room Breakeven Points 12 Fixed Costs $4,000.00 13 Price per Person $140.00 14 Variable Cost Pct 58.00% 15 Variable cost dollar 16 CM % 17 BE point Rooms Sold 18 19 Food Breakeven Point 20 Fixed Costs $5,000.00 21 Price per Person $21.00 22 Variable Cost Pct 38.00% 23 Variable cost dollar 24 CM % 25 BE point Patrons ... M4 Statement of Cash Flows Temp M5 Ratios M6 Controls M7 CVP MBA3 Budget M8 ... + Ready Accessibility: Investigate + 91%Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started