Question

Last year a 700-room hotel was open for 365 days, had rooms department costs of $7,409,000, and achieved a 75% occupancy. What was the hotel’s CPOR for rooms department costs?

Answer 1

The Cost per Occupied Room (CPOR) for a hotel's rooms department is calculated by dividing the total rooms department costs by the number of rooms sold over a period. For this 700-room hotel with a 75% occupancy rate over 365 days, the CPOR is found to be $38.66 per occupied room.

Step-by-step explanation:

The question asks us to calculate the Cost per Occupied Room (CPOR) for a hotel's rooms department. This is a common financial metric used in the hospitality industry to gauge the cost efficiency of running a hotel. The CPOR is determined by dividing the total rooms department costs by the number of rooms sold in a given period.

How to Calculate CPOR

To find the CPOR, we'll need to calculate the total number of occupied rooms over the year. Since the hotel has a 75% occupancy rate for its 700 rooms and it was open for 365 days, we can multiply 700 rooms by 365 days, and then take 75% of that number. This gives us the total number of room-nights sold in a year.

CPOR Calculation Example

Total number of room-nights = 700 rooms × 365 days × 75%
Total room-nights = 191,625
Next, we divide the total rooms department costs by the total room-nights to find the CPOR.
CPOR = $7,409,000 / 191,625 room-nights = $38.66

Therefore, the hotel's CPOR for the rooms department costs is $38.66 per occupied room.