Question

Problem 17:

The Greenhill Hotel’s total revenue for 20X1 totaled $5,000,000, while total expenses totaled $4,500,000. Assume the sources of its revenue and the distribution of its expenses were exactly like the lodging industry averages shown in Exhibit 1 of the chapter.

Required:

1. What was the hotels net income for 20X1?
2. What were the hotel’s room sales for 20X1?
3. What were the hotel’s rentals and other income for 20X1?
4. What were the hotels salaries, wages, and benefits for 20X1?

Exhibit 1:

Revenues

Rooms                                                                                                                                     69.5%

Food and beverage                                                                                                                 24.8

Other operated departments                                                                                                 4.4

Rentals and other income                                                                                                      1.3

                                                                                                                                                            

            Total                                                                                                                            100.0%

Costs and Expenses

Salaries, wages, and benefits                                                                                                 44.8%

Operating expenses                                                                                                                35.7

Cost of sales                                                                                                                            8.5

Property taxes and insurance                                                                                                 6.5

Management fees                                                                                                                   4.6

                                                                                                                                                            

            Total                                                                                                                            100%

Answer 1

1) What was the hotels net income for 20X1?
Revenue	$ 5,000,000.00
Less: Total Expenses	$ 4,500,000.00
Net Income	$    500,000.00
2)What were the hotel’s room sales for 20X1?
Hotel’s room sales = $5,000,000 x 69.50%	$ 3,475,000.00
3)What were the hotel’s rentals and other income for 20X1?
Hotel’s rentals and other income  = 5,000,000 x 1.30%	$      65,000.00
4) What were the hotels salaries, wages, and benefits for 20X1?
Hotels salaries, wages, and benefits = $4,500,000 x 44.80%	$ 2,016,000.00