Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Prancing Pony Inn, a 100-room hotel, currently operates at 75.00% occupancy, a rack rate of $60.00, and a marginal cost of $8.00 per room.
The Prancing Pony Inn, a 100-room hotel, currently operates at 75.00% occupancy, a rack rate of $60.00, and a marginal cost of $8.00 per room. The management of the Prancing Pony Inn is considering discounting the rack rate by both 10.00% and 20.00% so that they can increase the occupancy. What equivalent occupancy percentage must be achieved to maintain the same levels of room contribution margin for both 10.00% and 20.00% discount levels (assume that marginal cost will remain the same for the two discount situations)?
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