Hotel Room Pricing and different formulas

Hotel Room Pricing and different formulas

1. ROOM
PRICING

2. HUBBARTFORMULA
•RATE OF RETURN+OPERATING EXPENDITURE
•365 X NUMBER OF ROOMS X ESTIMATED%OCCUPANCY

3. RATE OF
RETURN(R.O.I)
•CALCULATE THE HOTELS DESIRED
PROFIT BY MULTIPLYING THE DESIRED
RATE OF RETURN BY THE OWNER’S
INVESTMENT

4. OPERATING

EXPENDITURE
•OPERATING EXPENDITURE CONSIST
OF VARIOUS FIXED CHARGES LIKE
•MANAGEMENT FEES.
•HUMAN RESOURCES
•OTHER MANAGEMENT CHARGES.

5. OPERATING

EXPENDITURE
SALARY AND
PAYROLL RELATED.
ELECTRICITY DEPRICIATION.
INTEREST. ROOM AMMENITIES

6. OPERATING EXPENDITURE
LAUNDRY TELEPHONE MARKETING

7. OPERATING
EXPENDITURE
•SALARY AND PATROLL RELATED
•EXPENDITURE
•(5X4000X12)=2,40,000.
•ELECTRICTIY12X4000 = 48,000.
•DEPRICIATION@5%OF 30,00000.
•INTEREST OF 12%@ON 5,00,000
LOAN = 60,000.
•ROOM AMMENTIES 100X6X365 =
2,19,000.

8. OPERATING
EXPENDITURE
•LAUNDRY = 15,000.
•TELEPHONE = 5000.
•MARKETING = 20,000.
•PRORPERTY TAX = 10,000.
•TOTAL EXPENDITURE = 7,67,000.

9. DESIRED PROFIT
•R.O.I X OWNER’S INVESTMENT
•3,000,000 X 20% = 600,000.

10. TOTAL
NUMBER OF
GOODS
SOLD
•365 X10 X 60% = 2190.
•(365X NUMBERS OF ROOMS X
ESTIMATED %OCCUPANCY)

11. AVERAGE ROOM RATE
•RATEOFRETURN+OPERATINGEXPENDITURE
•365XNUMBEROF ROOMSXESTIMATED%OCCUPANCY
⦿6,00,000+7,67,000
2190
•=RS 624/-