Motley Motel's potential average room rate is calculated to be $62. Assume that this motel had three market segments. Vacation travelers use 75 percent of the room nights and are charged 100 percent of the rack rate. Business travelers use 15 percent of the room nights and are charged 90 percent of the rack rate. Sports teams account for 10 percent of the room nights and are charged 80 percent of the rack rate.
a. Calculate the room rate by market segment. (Hint: Refer p.276 of the Jagels text, "Room Rates for Each Market Segment" for an example of how to solve this problem)
b. Prove that your calculations are correct, assuming that total annual room nights are 7,300.