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John Taylor owns and manages the Stratford Hotel in Romford Road. Taylor recently bought the hotel for 0 . 7 0 million and then spent
John Taylor owns and manages the Stratford Hotel in Romford Road. Taylor recently bought the hotel for million and then spent a further million on renovations, fixtures, fittings, and equipment. The hotel has twinbedded rooms, a bar restaurant, and a leisure facility which is available free for use by hotel guests. Taylor estimates the costs of operating the hotel over a year as follows:Business rates millionMaintenance and repairs millionDepreciation of fixtures, fittings, and equipment millionSalariesassistant managers, barrestaurant and facilities manager millionWages fulltime staff millionElectrical and utilitiesincluding average variable cost of per guest per night million.Administrationincluding average variable cost of per guest per night million.Advertising millionParttime reception, bar, kitchen, and housekeeping staffaverage variable cost per guest per nightOther costs average variable cost per guest per nightRooms are let on a halfboard basis and the average variable cost per meal served is:Breakfast Evening meal The hotel operates for a week year and have twinbedded occupation. Taylor operates a standard charge of per guest per night, and on average each guest generates a further per night in a net profit from spending at the bar. Taylors hotel had an average guest capacity of during the year. Taylor requires an annual return on capital employedreturn on investment.In order to improve the hotels profitability, Taylor introduces a business user tariff of based on guest per room per night on weekdays, and on a weekend, he proposes a special tariff of per person per night on the basis of guests per room. Because of this strategy, his hotel has room occupancy during the weekdays per person night and room occupancy per night at weekends. John Taylor has consulted you for advice regarding the Cost, volume, and profits of operating the hotel. The hotel variable cost per guest night is :
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