Motel 9 is a chain with 10 hotels, which operates 365 days a year. The chain invested $200 million to purchase land for these 10 hotels and $100 million to build and furnish them. Each hotel has 150 rooms and charges on average price of $80 per night. Each hotel is staffed with 20 employees; each paid $200 a day on average. On average the hotel is 90% occupied at any given time. The Overhead cost is $1500 per day.
1. What is the labor productivity of each hotel? Express the answer as dollars per dollar?
2. What is the multi factor productivity of each hotel? Express the answer as dollars per dollar? Do not worry about the invested capital.
3. The hotel can increase the average occupancy to 95% if it hires one marketing employee. (Average pay $200/day). Should the hotel hire this person or not. Justify your answer.