Garden Royal is one of the finest and grandest hotels in the city. It offers state-of-the-art room accommodation, excellent room service, catering, function rooms and more. Since its existence, Garden Royal hotel was performing very well in terms of profitability, quality service and customer satisfaction. Before the pandemic, the hotel spent huge amount of money for maintenance, repairs and renovation. The purpose of such repairs and maintenance was to prepare for something innovative service and at the same time timely for the preparation for the coming summer season (the season where there is a great demand or high level of sales). To make the story short, as of the moment, Garden Royal is experiencing financial difficulty because it was greatly affected by the pandemic. No cash inflow as a result of sales and huge amount of money was spent for its people and maintenance cost. The company as of this time is considering temporary shutdown of the Garden Royal and even planned to sell the hotel.

Question:

1. Using Breakeven Analysis, how are you going to evaluate the situation of Garden Royal in order for you to have a scientific basis in deciding whether to temporary shutdown or to continue its operation?

2. What would be the deciding factor for you to continue the operation of Garden Royal?