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Incremental Revenue and Cost

The Sunrise Hotel has 200 rooms. Each room rents at $110 per night and variable costs total $16 per room per night of occupancy. Fixed costs total $84,000 per month.

If the hotel spends an additional $10,000 in the month of February on advertising they feel that they can expect occupancy rate to increase by 5%. What would be the financial impact of spending this additional money on advertising for the month of February (28 days)?

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The increase in occupancy is 5% for the month. That means 10 (200*5%) room ...

Solution Summary

The solution computes the financial impact of spending additional money on advertising on revenue by Sunrise Hotel.