# Break-even point (price)

• Jan 15th 2013, 06:59 PM
phi1234
Break-even point (price)
Question: How much would the Hilton have to charge on average per room to break-even?

-Startup costs are \$500M
-Hotel costs \$20M to operate
-Assuming a 10 year horizon.

Any thoughts would be much appreciated.
• Jan 15th 2013, 08:55 PM
richard1234
Re: Break-even point (price)
Question is too vague. \$20 million per year? Month? What is the current demand for hotel rooms?
• Jan 21st 2013, 01:48 PM
phi1234
Re: Break-even point (price)
Hotel costs are \$20M/yr to operate and there are 400 rooms in the hotel.
• Jan 21st 2013, 06:35 PM
abysmalgnat
Re: Break-even point (price)
Let's assume each room is charged at \$P per year, then,

4000P=500+10(20)
So 4000P=700
P=\$175,000 per room per year to break even, assuming full occupancy.
• Jan 24th 2013, 12:41 AM
cobemuathu
Re: Break-even point (price)
Where is 4000p?
• Jan 25th 2013, 05:52 AM
abysmalgnat
Re: Break-even point (price)
400 rooms a year over 10 years.