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 8 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?

The longest a person has survived after a heart transplant is 24 years.

Did you know?

In the United States, an estimated 50 million unnecessary antibiotics are prescribed for viral respiratory infections.

Did you know?

The familiar sounds of your heart are made by the heart's valves as they open and close.

Did you know?

Elderly adults are living longer, and causes of death are shifting. At the same time, autopsy rates are at or near their lowest in history.

Did you know?

Serum cholesterol testing in adults is recommended every 1 to 5 years. People with diabetes and a family history of high cholesterol should be tested even more frequently.

A passenger train crosses Stony Creek Bridge in the Rocky Mountains in 1878. Railroads were importan A passenger train crosses Stony Creek Bridge in the Rocky Mountains in 1878. Railroads were importan
During World War I, advancing armies unloosed ferocious artillery barrages to destroy deeply entrenc During World War I, advancing armies unloosed ferocious artillery barrages to destroy deeply entrenc
The “Big Four” world leaders meet at the Hotel Crillon in Paris, 1919. From left to right (front row The “Big Four” world leaders meet at the Hotel Crillon in Paris, 1919. From left to right (front row
BMI Formula BMI Formula
How to calculate present value using the compound interest formula (Question 1) How to calculate present value using the compound interest formula (Question 1)
Nutritional Similarities between Infant Formula and Breast Milk Nutritional Similarities between Infant Formula and Breast Milk
Video: Cortisol (protein catabolism, gluconeogenesis, vasoconstriction & anti-inflammation)

For a complete list of videos, visit our video library