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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 0.70 million and then spent a further 0.80 million on renovations, fixtures, fittings, and equipment. The hotel has 60 twin-bedded 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 0.16 millionMaintenance and repairs 0.025 millionDepreciation of fixtures, fittings, and equipment 0.06 millionSalaries-assistant managers, bar/restaurant, and facilities manager 0.15 millionWages- full-time staff 0.14 millionElectrical and utilities(including average variable cost of 1 per guest per night)0.0544 million.Administration(including average variable cost of 2 per guest per night)0.0888 million.Advertising 0.04 millionPart-time reception, bar, kitchen, and housekeeping staff(average variable cost per guest per night)5Other costs (average variable cost per guest per night)1Rooms are let on a half-board basis and the average variable cost per meal served is:Breakfast 3Evening meal 8The hotel operates for a 50-week year and have twin-bedded occupation. Taylor operates a standard charge of 40 per guest per night, and on average each guest generates a further 5 per night in a net profit from spending at the bar. Taylors hotel had an average guest capacity of 70% during the year. Taylor requires an annual 10% return on capital employed/return on investment.In order to improve the hotels profitability, Taylor introduces a business user tariff of 50 based on 1 guest per room per night on weekdays, and on a weekend, he proposes a special tariff of 30 per person per night on the basis of 2 guests per room. Because of this strategy, his hotel has 90% room occupancy during the weekdays per person night and 75% 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 :
20.00
17.00
11.00
6.00

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