The Chicago Omni Hotel is a 750-room luxury hotel offering guests the finest facilities...

The Chicago Omni Hotel is a 750-room luxury hotel offering guests the finest facilities in downtown Chicago. The hotel is organized into four departments: lodging, dining, catering, and retail stores. Each of these departments is treated as a profit center. Lodging is the largest profit center and is responsible for room rental, maids, reservations, main lobby, and bell captains. Dining operates the coffee shop, room service, and three restaurants out of a single kitchen. Catering services is separate from the dining operations. It offers banquet services to large parties, weddings, and business meetings through its own kitchen and staff separate from the dining department’s kitchen. However, dining and catering coordinate purchasing and staff scheduling. Retail is responsible for leasing space off the lobby to independent store owners (gift shop, car rental agencies, airline ticket counters, jewelry, flowers, toys, liquor, etc.). There are currently 14 independent stores operating in the hotel. Profit center managers are paid a salary and a bonus. The annual bonus depends on a number of factors, including their unit’s profits, customer satisfaction, and employee retention.

The following table presents budgeted operating data for the first year:

Besides the separable expenses traced directly to each profit center, the hotel incurs the following additional expenses:

Profit center performance is part of each profit center manager’s annual bonus. Also, to evaluate how each department of the hotel is performing, senior management desires a statement calculating a performance measure.

Required:

a. Design a performance report for the Chicago Omni Hotel. Provide a statement calculating the performance of each unit using your performance report format. This statement should calculate for each unit a bottom-line profit/loss, which will be used as part of the performance evaluation and reward systems.

b. Discuss the rationale underlying the design of the performance report you chose.

c. Using your report, discuss the relative performance of each profit center. Which ones are the best and which are the worst?