1. What is the management fee (1) on a per available room basis and (2) as...
1. What is the management fee (1) on a per available room basis and (2) as a percentage of total revenue for a 255-room hotel located in California that had an occupancy level of 62%, ADR of $84.53, a room revenue to total revenue % of 56.4%, and a gross operating profit % of 24.8%? The management fee agreement stipulated that the company would receive 3% of gross revenue, and 10% of gross operating profit.
Please calculate annual room revenue (round to two decimal places) $ ___
2. Please use the information from Question 10 to calculate the Annual total revenue.
Annual total revenue (round to two decimal places) $ ___
3. Please use the information from Question 10 to calculate the GOP.
GOP (round to two decimal places) $ ____
4.Please use the information from Question 10 to calculate the Mgmt fee base fee.
Mgmt fee base fee (round to two decimal places) $ ___
5. Please use the information from Question 10 to calculate the Mgmt fee incentive fee.
Mgmt fee incentive fee (round to two decimal places) $ ___
Homework Answers
Answer 1:
Given that:
Number of rooms = 255
Occupancy level = 62%,
Average daily rate (ADR) = $84.53
Annual room revenue = Number of rooms * Occupancy level * ADR * 365
= 255 * 62% * 84.53 * 365
= 4877930.445
= $4877930.45
Annual room revenue = $4,877,930.45
Answer 2:
Room revenue to total revenue % of 56.4%.
Annual room revenue = $4,877,930.445
Annual total revenue = 4877930.445 / 56.4% = $8,648,812.85
Annual total revenue = $8,648,812.85
Answer 3:
Gross operating profit in % = 24.8%
Gross operating profit = 8648812.845 * 24.8% = $2,144,905.59
Gross operating profit = $2,144,905.59
Answer 4:
The management fee agreement stipulated that the company would receive 3% of gross revenue, and 10% of gross operating profit.
Mgmt fee base fee = $8,648,812.85 * 3% = $259,464.39
Mgmt fee base fee = $259,464.39
Answer 5:
Mgmt fee incentive fee = $2,144,905.59 * 10% = $214490.56
Mgmt fee incentive fee = $214,490.56
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