Answer Happy

Problem 7.11 The WaltWonderful hotel in Orlando has conference facilities that can cater for 650 delegates. Based on 54,000 delegate days sold last year, the cost to hosdelegate for one day at the hotel has been estimated to be as follows: Variable costs per delegate day Food Drink Casual staff wages ÖFixed costs per delegate day Hotel allocation of overheads Permanent staff salaries $15 12 6 ich 4 6 101 $33 10 $43

This year the hotel is experiencing low conference sales during a worldwide economic downturn. The hotel's General Manager has told his conference sales team that they are going to have to be willing to drop normal conference prices during this downturn. The conference sales manager has been approached by a local university to host a one-day conference in three months' time. At this time no other conference has been booked and the likelihood of any booking being made for this period is remote. The university has offered to pay $26 for each delegate attending plus $3,000 for venue hire. It is projected 400 delegates will attend the conference. Required: Assuming all the delegates will be local and no delegates will stay at the hotel, prepare an analysis to determine whether a positive financial result will arise from agreeing to host the conference on the terms that the university is seeking. Now imagine a second conference organiser approached the hotel to hold a three-day magicians' conference in the week after the proposed university conference. No conference is booked for this week. It is estimated that 200 magicians will attend the conference and stay in the hotel for three nights. Each magician's accommodation booking would contribute $30 towards hotel profit. The conference organiser is negotiating hard to pay a conference delegate package of $12 per delegate day with no venue hire fee. Demonstrate whether the magicians' conference organiser's offer is justifiable on financial grounds.