This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Using the Hubbart formula, calculate the necessary ADR from a 100-room hotel with 1 million in ... (Read 6 times)

joesmith1212

  • Hero Member
  • *****
  • Posts: 549
on: Sep 11, 2019

Question 1

What is DDA and why is it difficult to measure for the industry at large?
 
  What will be an ideal response?

Question 2

Using the Hubbart formula, calculate the necessary ADR from a 100-room hotel with 1 million in annual expenses and a 60 occupancy rate that cost 10 million to build if the investor wants to earn a 20 return on investment.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

GCabra

  • Sr. Member
  • ****
  • Posts: 331
Reply #1 on: Sep 11, 2019

Answer 1

DDA is daily dollar average received for a rented car. It is difficult to measure for the industry at large because several companies routinely include revenues from insurance and other charges in the total, which distorts the comparisons between companies.

Answer 2

Based on the Hubbart formula, to earn a 20 return on investment (20 x 10 million = 2 million), a hotel must generate 3 million in revenue since annual expenses = 1 million. Thus, the required ADR would be 136.99 or 137 (rounded) based on: 3 million/21,900 room days (100 rooms x 365 days x .60 occupancy rate) = 136.99.


joesmith1212

  • Hero Member
  • *****
  • Posts: 549
Reply #2 on: Sep 11, 2019
TY


GCabra

  • Sr. Member
  • ****
  • Posts: 331
Reply #3 on: Sep 11, 2019
You're welcome


« previous next »
 

Did you know?

Lower drug doses for elderly patients should be used first, with titrations of the dose as tolerated to prevent unwanted drug-related pharmacodynamic effects.

Did you know?

The human body's pharmacokinetics are quite varied. Our hair holds onto drugs longer than our urine, blood, or saliva. For example, alcohol can be detected in the hair for up to 90 days after it was consumed. The same is true for marijuana, cocaine, ecstasy, heroin, methamphetamine, and nicotine.

Did you know?

Though “Krazy Glue” or “Super Glue” has the ability to seal small wounds, it is not recommended for this purpose since it contains many substances that should not enter the body through the skin, and may be harmful.

Did you know?

Eating food that has been cooked with poppy seeds may cause you to fail a drug screening test, because the seeds contain enough opiate alkaloids to register as a positive.

Did you know?

The first oncogene was discovered in 1970 and was termed SRC (pronounced "SARK").

H. erectus migrated out of Africa beginning about 1.8 million years ago and is first known from Geor H. erectus migrated out of Africa beginning about 1.8 million years ago and is first known from Geor
Lucas Samaras, Room No. 2 (popularly known as the Mirrored Room) (detail). Lucas Samaras, Room No. 2 (popularly known as the Mirrored Room) (detail).
How to calculate monthly payments at varying amortization periods (Question 3) How to calculate monthly payments at varying amortization periods (Question 3)
Black-Scholes Formula Black-Scholes Formula
Earth 150 Million Years Ago Earth 150 Million Years Ago
Gray Morris's Calculate with Confidence, Canadian Edition, 2nd Edition Gray Morris's Calculate with Confidence, Canadian Edition, 2nd Edition
Video: Hormonal feedback loop components & Glucagon (glycogenolysis and gluconeogenesis)

For a complete list of videos, visit our video library