Visit a local hotel and observe its daily operating activities. The costs associated with some of its activities are variable while others are fixed with respect to occupancy levels.

Required

1. List cost items that are likely variable for the hotel.

2. List cost items that are likely fixed for the hotel.

3. Compare the fixed cost items with variable cost items. Rank costs within each category based on your perception of which ones you believe are the larger.

4. Based on your observations and the answers to parts 1 through 3, explain why many hotels offer discounts as high as 50% or more during their low occupancy season.