Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Seaside hotel is going to make a $2,000,000 investment in its hotel by completing renovating a floor of the hotel. This is an extensive renovation
Seaside hotel is going to make a $2,000,000 investment in its hotel by completing renovating a floor of the hotel. This is an extensive renovation that will involve removing all of the interior walls and will result in a completely new floorplan. The new floor-plan will can have three types of rooms: Luxury Suites, Large rooms, or Regular rooms, or a mix of all three. Due the size of the floor, they can build a maximum of 20 luxury suites or a maximum of 40 large rooms or a maximum of 60 regular rooms or a mix of all three. Luxury suites will rent for $400 per night. Large rooms will rent for $200 per night. Regular rooms will rent for $135 per night. The cost to maintain each room, excluding depreciation, is $30ight ($25 in variable maintenance and $5 in fixed booking costs). The food and beverage manager noted that since the suites are often used for conventions as private hospitality suites, they purchase an average of $200 per night in room service. Large rooms purchase an average of $40 and Regular $10 per night for room service. Room service generates a 70% gross profit. The cleaning manager noted that each suite requires an extra $10ight in cleaning costs. Estimated maximum demand per night is as follows: Suites:10 rooms Large: 25 rooms Regular: no maximum demand Required: Part A: How many of each room should they build as part of the renovation? Part B: What qualitative factors should be considered
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started