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HomeSuites is a chain of all-suite, extended-stay hotel properties. The chain has 15 properties with an average of 200 rooms in each property. In year
HomeSuites is a chain of all-suite, extended-stay hotel properties. The chain has 15 properties with an average of 200 rooms in each property. In year 1, the occupancy rate (the number of rooms filled divided by the number of rooms available) was 60 percent, based on a 365-day year. The average room rate was $205 for a night. The basic unit of operation is the night," which is one room occupied for one night The operating income for year 1 is as follows. HomeSuites Operating Income Year 1 Sales revenue Lodging $138,080,000 Food & beverage 17,082,000 Miscellaneous 9,855,000 Total revenues $165,017,000 Costs Labor $ 42,300,000 Food & beverage 13,140,000 Miscellaneous 9,855,000 Management 2,511,000 Utilities, etc. 37,500,000 Depreciation 11,250,000 Marketing 25,110,000 Other costs 8,011,800 Total costs $149,677,000 Operating profit $ 15,340,000 In year 1, the average fixed labor cost was $411.000 per property. The remaining labor cost was variable with respect to the number of nights. Food and beverage cost and miscellaneous cost are all variable with respect to the number of nights. Utilities and depreciation are fixed for each property. The remaining costs (management, marketing, and other costs) are fixed for the firm, Prepare a budgeted income statement for year 2 if the "High Occupancy" strategy is adopted. cost calculations to 2 decimal places.) HOMESUITES Operating Income Year 2 Sales revenue Lodging Food & beverage Miscellaneous Total revenues Costs Labor Food & beverage Miscellaneous Management Utilities etc. Depreciation Marketing Other costs Total costs Operating profit Required A Required CD Prev B of 3 Ne Required A Required B Required C Which is the correct pricing strategy for year 2. High Occupancy Strategy High Price Strategy Current Strategy
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