Question - A motel had the following annual sales revenue and average room rate figures for the last five years. During this five-year period there were no changes in the number or types of rooms available and the clientele remained basically the same. You must prepare answers for each part of this question (a, b, and c) to receive full credit.
|
Year
|
Annual Sales Revenue
|
Rm. Rates 1
|
|
1
|
$ 1,401,429
|
$ 75.00
|
|
2
|
$ 1,429,367
|
$ 76.30
|
|
3
|
$ 1,480,552
|
$ 77.60
|
|
4
|
$ 1,520,700
|
$ 78.50
|
|
5
|
$ 1,553,091
|
$ 79.90
|
(a) Prepare room rate trend numbers from the average room rate using 100% (or 100) as the base trend index number for Year 1.
(b) Use the room rate identified to convert the reported annual historic sales revenue to current dollars.
(c) After the conversion is completed, comment on the result of your analysis.