Convention Hotel Customers Business Hotel Customers 278 90 2

Convention Hotel Customers Business Hotel Customers 278 $90 $25 $150 300 Variable Customers f Average price/room night Variable costroom night Rack Rate (max price) Maximum number rooms availablelday 503 $73 $25 $110 700 or this day Calculate total contribution to profit and hotel effectiveness percentage Total Contribution to Profit and Overhead = no % Hotel Management Effectiveness %- round to 2 decanal places

Solution

Total Contribution to Profit and Overhead = Customers for the day * (Average price per room night - Variable cost)

= 278*(90-25) + 503*(73-25)

= 42,214

Maximum Potential contribution to Profit and Overhead = (Maximum number of rooms available per day * (Rack rate - Variable cost)

= 300*(150-25)+700*(110-25)

= 97000

Hotel Management Effectiveness = Total Contribution to Profit and Overhead / Maximum Potential contribution to Profit and Overhead

= 42214/97000

= 43.52 %