Real-Life Math -- Solution
Off-season revenue:
80 percent of 100 rooms = 80 rooms
80 rooms per night x 210 nights = 16,800 rented rooms
16,800 rented rooms x $95 = $1,596,000 in revenue for the off-season
Peak season revenue:
100 percent of 100 rooms = 100 rooms
100 rooms x 155 nights = 15,500 rented rooms
15,500 rented rooms x $135 = $2,092,500 in revenue for the peak season
So the total comes to:
Off-season revenue at $1,956,000 + peak season revenue at $2,092,500 = $3,688,500 total revenue earned for rented rooms over one year
Lost room revenue:
20 percent of 100 rooms = 20 unoccupied rooms per night in the off-season
20 rooms x 210 nights = 4,200 unoccupied rooms during the off-season
4,200 rooms x $95 per night = $399,000 in lost room revenue
What percentage is your lost room revenue?
$399,000 in lost room revenue / $3,688,500 revenue earned x 100 = 10.8 percent
Your lost room revenue accounts for 10.8 percent of your total revenue. You will have to increase your marketing budget for the following year.