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Newly Built is a 120 room hotel, located on a serene Caribbean island. The manager believes that to maximise profits full room rates should be

Newly Built is a 120 room hotel, located on a serene Caribbean island. The manager believes that to maximise profits full room rates should be charged at all times. A consultant found the following:

Room rates (daily) $80

Average occupancy (tourism season) 80%

Average occupancy (out of season) 25%

Length of tourism season (days) 150

Economic length of a year (days) 350

The consultant proposed the following:

Option 2

Room rates (daily) (Tourism season) $80

Room rates (daily) (Out of season) $60

Expected occupancy (tourism season) 80%

Expected occupancy (out of season) 60%

Option 3

Room rates (daily) (Tourism season) $80

Room rates (daily) (Out of season) $55

Expected occupancy (tourism season) 80%

Expected occupancy (out of season) 75%

Based on the above information management of Newly Built asked you to calculate the yield for the three options and advise.

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