formulas determining the price of the room

8/6/2019 Formulas Determining the Price of the Room

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By: Nurul Qamariyah (08360156)



Three Known Formula For

Determining Price1. The rule of thumb

2. The hubbart formula system

3. Break even point analysis



The Rule of ThumbRoom with a method of pricing ³the rule of thumb´, aprice calculation of the most simple room with the

assumption that the average room price is the totalcost / capital one room divided by a thousand.



The Formula

y



Case Study of The Rule of

ThumbPAULEN HOTEL is the name of a hotel that is planned to beoperational in December1997. Data fromthe management mentioned that the total cost of the hotelbuilding is U.S. $ 5,500,000 of the funds obtained from theshareholders and loans from the bank. With details as follows:

shareholders' funds of U.S. $ 3,500,000 whilethe acquisition of a bank loan of U.S. $2,000,000.

number of rooms that will be sold as many as 108.

T

hese hotels nationwide, without the interventionof foreign parties.room type will be sold, whichis standard, de luxe, and suite room.



QuestionIf the hotel operation is planned as a two star hotel with a number of rooms are as

follows: 60% standard room, suite room 7%, andthe rest is a de luxe room.Make its published rate, if the percentage of roomtypes are as follows:



Method 1

1 Standard room 47,5% Tarr

Single x

Double x+5

2 De luxe room 52,5% Tarr

Single Y

Double Y+5%

3 Suite room 85% (ELP)



Method 2

1 Standard room = Arr

2 De luxe room = 10% Arr

3 Suite room = 70% Arr



Solutiona. Determining the appropriate amount of room type:

Standard room = 60% x 108 = 65 rooms

De luxe room = 33% x 108 = 35 rooms

Suite room = 7% x 108 = 8 roomsb. Total building construction cost:

shareholder US $ 3.500.000

bank loan US $ 2.000.000 +

total investment costs US $ 5.500.000



y



f. calculation of price per room type

Method 1 Standard room X = 47,5%

Single = X = 47,5% x 101,86 = 48,38

D0uble = X = X + 5 = 53,38

De luxe room Y = 52,5% Tarr

Single = Y = 52,5% x 101,86 = 53,48

Double = 53,48 + 5 = 58,48ELP (Exception Limit Price)

Suite room = 85% Tarr

Suite room = 85% x 101,86 = 86,58

Method 2

Standard room = Arr

Standard room = 50,93

De luxe room = 10% Arr

De luxe room = (10% x 50,93) + 50,93 =56,02

Suite room = 70%

Suite room = (70% x 50,93) + 50,93 = 86, 58



g. design of the selling price based on the price plan isalso adjusted by a factor ofcompetition

Type of roomprice plan

Selling priceMethod 1 Method 2

Standard room

y Single

y Double

De luxe room

y Single

y Double

Suite room

48,38

53,38

53,48

58,48

86,48

50,93

55,93

56,02

61,02

86,58

55

60

60

65

90



Thank you«

formulas determining the price of the room

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