The Chicago Omni Hotel is a 750-room luxury hotel offering guests the finest fac
ID: 2349213 • Letter: T
Question
The Chicago Omni Hotel is a 750-room luxury hotel offering guests the finest facilities in downtown Chicago. The hotel is organized into four departments: lodging, dining, catering and retail stores. Each of these departments is treated as a profit center. Lodging is the largest profit center and is responsible for room rental, maids, reservations, main lobby, and bell captains. Dining operates the coffee shop, room service, and three restaurants out of a single kitchen. Catering services is separate from the dining operations. It offers banquet services to large parties, weddings, and business meetings through its own kitchen and staff separate from the dining departmentExplanation / Answer
(a) Particulars Logding Dining Catering Retail Total Revenues 39.2 9.8 5.8 1.9 56.7 Separable operating expenses 31.1 6.2 3.5 0.3 41.1 Occupancy costs on the basis of square footage 3.98 0.32 0.80 0.51 5.6 Administration costs on the basis of no of employees 0.93 0.13 0.03 0.00 1.1 Marketing costs on the basis of revenues 0.97 0.24 0.14 0.05 1.4 Profit 2.22 2.91 1.33 1.04 7.5 (b) Occupancy costs has been allocated on the basis of square footage used, as occupancy costs consists of interest, taxes, insurance, which as per normal parlance is being paid as per the floor area Administration costs has been allocated on the basis of no of employees, as admin costs consists of accounting, human resource, security, maintenance, and senior management, which are essentially people. marketing costs has been allocated on the basis of revenues, as the more the amount of marketing, the more will be the sales. (c) Loging is the best it provides highest revenue of $2.22m and retail is the worst, as it provides lowest revenue of $1.04m Happy to help