Thread: 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.

Question is too vague. $20 million per year? Month? What is the current demand for hotel rooms?

Hotel costs are $20M/yr to operate and there are 400 rooms in the hotel.

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.

Where is 4000p?

400 rooms a year over 10 years.