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Hospitality Financial Management Question Paper

Hospitality Financial Management

Course:Bachelor Of Science In Hospitality Management

Institution: Kenyatta University question papers

Exam Year:2009

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
SCIENCE IN HOSPITALITY AND TOURISM MANAGEMENT
HTM 402: HOSPITALITY FINANCIAL MANAGEMENT

DATE: Wednesday 23rd December, 2009 TIME: 11.00 a.m. – 1.00 p.m.

INSTRUCTIONS
Attempt ALL questions in Sections A and B. Attempt only one question in Section C. All
monetary value is in Kenya shillings.

SECTION A

1.
Discuss the concept of product and service differentiation in a restaurant situation. [5 marks]
2.
Explain briefly how a hotel’s average room rate can be calculated or projected while giving the owners expected return, priority consideration. [5 marks]
3.
In studying the feasibility of a new hotel, how can CVP analysis be used to determine the volume of sales required to give a desired return on investment? [5 marks]
4.
Explain the concept of budgeting. [5 marks]

SECTION B – (30 MARKS)
There are 5 competitive hotels near your proposed hotel site at South Coast, Mombasa.
They have the following number of rooms and current occupancy rates:
Motel Rooms Occupancy
A 74 82%
B 45 73%
C 58 85%
D 48 70%
E 52 75%
Demand for rooms in the area is broken down into the following sources and growth
rates:
Source Percentage Growth
rate (%)
Business travellers
10%
5%
Vacation travellers
80%
8%
Other travellers
10%
1%
(a)
Calculate the current average occupancy of the five hotels.
(b)
Calculate the composite rate of growth in demand.
(c)
Apply the composite growth rate to the demand figures to obtain projected demand for each of the next four years.
(d)
Assume that a 70% average room occupancy for the hotels in this area is profitable. Calculate the supply of rooms that could be supported for each of the next 4 years.

SECTION C
6.
As the manager of the 80 room motel, you have the responsibility of preparing next year’s budget from the following:
(a)
annual occupancy 70%
(b)
average room rate 44
(c)
variable cost per room occupied 8
(d)
annual fixed costs 220,000
Prepare the motel’s budget for next year. Assume a 365-day year. [20 marks]
7.
A restaurant has an average selling price of 12.95 with an average variable cost of n5.44. Fixed costs are 140,000. Calculate the following:
(a)
What is the unit contribution margin?
(b)
What is the break-even units?
(c)
What is the variable cost percentage?
(d)
What is the unit contribution margin as a percentage?
(e)
What is the Break-even sales revenue?
[20 marks]

Hospitality Financial Management Question Paper

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