Glitz hotel, a 520-room hotel, rents hotel rooms for $120/night. At the current sales level of 440 rooms per night, Glitz currently makes a profit of $30/room:

Sales $120

Costs 90

Profit 30

It costs Glitz $90/night to maintain a room ($60 in depreciation, $25 in variable maintenance and $5 in fixed booking costs).

Each of these are separate situations:

1. What is the current number of rooms per night needed to break even.

2. What should the price be per room if Glitz wants to make a total nightly profit of $16,000.

3. Glitz has been approached by Conventions2000.com to purchase a block of 220 rooms for $80/room per night. If this special order is accepted, Conventions2000.com would take care of all booking costs for the rooms booked through Conventions2000.com, and the $5 fixed booking costs can be eliminated.

Required: Should Glitz accept this special offer (include both qualitative and quantitative analysis)

Glitz Hotel