Sunrise Hotels (A) Case Background and Site Description You have been hired by the general manager (GM) of a budget hotel in Colorado. The hotel is part of a large economy lodging chain in North America. Economy lodging hotels include Super 3, Motel 6 and Days Inn. They are typically small, ee-standing hotels with no food and beverage outlets (to, restaurants and bars}, no conference or banquet mcilities, no meeting spaces, and limited services. There is a single output: the provision of rooms for one or more nights. While there are \"single\" and \"double\" rooms, differences are minor so there is no need to use weighted average prices or costs. With a single output, there is one obvious cost driver: the number of rooms rented. An economy lodging "prop erty typically has Ill] rooms, although size may range from 613 to ll rooms. Rooms are basic and there are few amenities. Room access is typically om the building's exterior. Like chain. restaurants, economy lodging hotels develop standard properties to minimize construction costs. A typical property is staffed by a GM, ve Ji'ront desk workers, ve housekeepers, a head housekeeper, a laundry worker, and a maintenance worker. 'Wages for all hotel workers other than the GM are at or slightly above the minimum wage; this is the result of high employee turnover and lowskill positions. Recruiting and training costs for employees, other than the GM, are minimal. The GM has a great deal of autonomy in running the daytoday operations of the hotel. The GM is supervised by a district manager who typically oversees eight to fteen properties, visiting each property every four to six weeks. GMs are responsible for pricing (with corporate oversight), local advertising, hiring and terminating hotel sta selecting local suppliers for umque products or services (cg, landscaping, snow removal and major repairs}, purchasing and maintaining an inventory of standard products (2.3., soap, linens, coifee and cleaning supplies}, and conducting sales calls with local businesses. GMs participate in the budgeting process, although the procedure varies somewhat depending on the district manager and the individual manager (in, some area managers prefer a topdown approach whereas others support a participative bottomup approach). GMs are evaluated using both nancial and nonnancial metrics. A modest bonus is awarded to (Elvis who achieve their prot goals for the year. Additional bonuses are awarded for achieving customer satisfaction and internal audit targets. A propertyTs nancial targets for the bonus vary depending on local economic conditions and the physical condition of the assets. As with the budgeting process, the district manager may choose to negotiate the target with the GM or simply impose a target of heri'his choosing. GMs who do not achieve a minimum, company-wide audit score (also the threshold for the bonus} for three years are to be terminated (despite this requirement, the chief nancial ofcer could not remember this ever happening). The quality target is corporate-wide, but the specic gure depends on the property's age (ta, newer or renovated properties are held to a higher target than older, more rundown properties}