Question

2. You have the financing to build a 225 room hotel and you are considering a franchise agreement with a number of hotel brands. Assume the ADR for the different hotel classes would be as follows: Mid-Scale Upper-Midscale $125.00 Upper-Upscale $150.00 $100.00 For simplicity, assume the paid occupancy would be 70% regardless of the class segment. Consider the following franchisors as assigned to the following classes of hotels: id-Scale Hawthorne Suites Quality Inns Upper- MidScale Hampton Inns Clarion Hotels Upper-UpScale Hilton Hotels Omni Hotels a) Calculate the projected gross room revenue for year one for each of the franchises.

all of the informations are provided!

Answer 1

Number Of Rooms	225
Number of days per Year	365
Number of room days per year	82,125	(225x365)
Paid Occupancy room days per year regardless of class segment @70%	57,488	(82,125x70%)

Calculation of Projected Gross revenue for one year for each of the franchise:-

Projected Gross Revenue
Mid-Scale	$        100.00	Upper-Mid Scale	$        125.00	Upper-Upscale	$        150.00
Hawthorne Suits (57,488x$100)	$ 5,748,750	Hompton Inns (57,488x$125)	$ 7,185,938	Hilton Hotels (57,488x$150)	$ 8,623,125
Quality Inns (57,488x$100)	$ 5,748,750	Clarion Hotels (57,488x$125)	$ 7,185,938	Omni Hotels (57,488x$150)	$ 8,623,125

Note	The Information provided in the question does not talk about number of rooms available for each different class of hotels.(That is out of 225 rooms how many rooms will be available in Mid Scale,Upper-Mid Scale and Upper-Upscale segment)
	Also the Information provided in the question does not talk about number of rooms available for each franchise in a particular class of hotel.(for example out of 225 rooms, number of rooms will be given to Hawthorne Suits and Quality Inns under a Mid-scale)
	So It is assumed that franchise for All the 225 rooms of the hotel will be given to one franchise and all the 225 rooms will be in one particular class of hotel and projected gross revenue is calculated based on that assumption.