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Math Help - Break-even point (price)

  1. #1
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    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.
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  2. #2
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    Re: Break-even point (price)

    Question is too vague. $20 million per year? Month? What is the current demand for hotel rooms?
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  3. #3
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    Re: Break-even point (price)

    Hotel costs are $20M/yr to operate and there are 400 rooms in the hotel.
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  4. #4
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    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.
    Last edited by abysmalgnat; January 21st 2013 at 06:50 PM.
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  5. #5
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    Re: Break-even point (price)

    Where is 4000p?
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  6. #6
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    Re: Break-even point (price)

    400 rooms a year over 10 years.
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