Background Michelle has been working in the finance department of her company fo
ID: 2712518 • Letter: B
Question
Background Michelle has been working in the finance department of her company for 2 years. Yesterday her boss Janet informed her that they were wrapping up a final proposal on a new Residence Inn in Chesterfield, a tertiary market of St. Louis, Missouri. The original plans included a small kitchen and staging area to be used by outside caterers to deliver and prepare food for the meeting space. Janet was starting to question whether or not outsourcing was the best alternative. Consequently, she asked Michelle f she could prepare 2 capital budgets comparing the costs and benefits of both in-house and out-sourced catering for the new property. To help Janet get started she provided the information below gathered from other company-owned hotel franchises. 1: Determine the average annual revenue per square feet for hotels that provide in-house or outsourced catering services. (4 pts)Explanation / Answer
1) The Weighted Average Revenue per Square Feet is
With Inhouse Catering $ 127.09
Withe Outsourced catering $ 59.81
The workings are as under:
2) The Capital Budget for Inhouse catering is given below:
Calculation of Average Annual Revenue Hotels with Inhouse Hotels with Outsourced Catering Catering Sq feet Revenue Sq feet Revenue Hyatt Inn 3400 450000 Hilton Garden 3200 377000 Embassy Suites 6800 888000 Spring Hill Suites 4100 509000 Hyatt House 1800 117000 2400 152000 3500 174000 2900 191000 17500 2224000 10600 634000 Weighted Average Revenue per Sq ft 127.09 59.81Related Questions
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