& Management fee: 5 percent of rooms revenue Cost Approaches to Pricing 431 planteleposlanicimepeljareale 11. Expected paid occupancy is 70 percent. 10 Rooms department expenses equal $30,000 annually plus 15 percent of room sales. Required: Determine the required ADR to achieve Jeremy Harris's goal of earning an ROI of 15 percent. Problem 13 Josie's Place Inn, a proposed 30-room motel with a fully equipped restaurant, will cost $750,000 to construct. An estimated additional $50,000 will be invested in the business as working capital. Of the total $800,000 investment, $400,000 is to be secured from the Columbo Federal Bank at the rate of 10 percent interest. The projected occupancy rate is 80 percent for the year. The owners desire a 15 percent return on equity after the corporation pays income taxes of 25 percent. The estimated undistributable expenses, not including income taxes and interest expense, total $480,000. The estimated direct expenses of the rooms department are $7 for each room sold. Consider a year to have 365 days Required: 1. Determine the average price of a room using the Hubbart Formula, assuming the con- tribution from the restaurant department is $0. 2. If the double rooms are sold at a premium of $10 over singles, what is the price of singles and doubles? Assume a double occupancy rate of 40 percent. average room rates be decreased and still meet the owners' financial goals? 3. If the restaurant generates a department profit of $20,000 per year, how much may Problem 14 0,000,000 to construct. An estimated additional $200,000 will be invested in the business me Cody Hotel, a proposed 100-room hotel with a fully equipped restaurant, will cost ctment, $8,000,000 is to be secured from discupancy rate is 70 tinn