Question

The High Towers Center is a 300-room hotel that was built ten years ago for a total project cost of $24,000,000. The market value of the facility is now estimated at $42,000,000, and the general manager estimates that the level of guest service is worth at least $5,000 per room per year. A close competitor of the hotel charges $110 per night per room. According to the $1 per $1,000 approach to pricing rooms, what should the price of a room night be at the High Towers Center?a. $80b. The answer cannot be determined from the information given.c. $140d. $110

Answer 1

Answer:

a. $80

Explanation:

investment made                                         $24,000,000

Return required at $1 per 1,000                   $24,000

Number of rooms                                           300

Room rent should be = $24,000 / 300

                                    = $80

Therefore, The price of a room night be at the High Towers Center should be $80.