ICAEW BIP · Chapter 3 · Question 7 of 8
Seaview Hotel has 80 bedrooms and is open 365 days a year. Average occupancy is 70%. Total annual costs are £1,533,000. What is the cost per occupied room-night?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) £75.00
Explanation
Room-nights available = 80 x 365 = 29,200. Occupied room-nights = 29,200 x 70% = 20,440. Cost per occupied room-night = £1,533,000 / 20,440 = £75.00. Dividing by all available room-nights gives £52.50, which understates the cost of each room actually sold; £19,162.50 is the cost per room per year, not a service cost unit.
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