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Hospitality Finance Question Paper

Hospitality Finance

Course:Bachelor Of Science In Hospitality Management

Institution: Kenyatta University question papers

Exam Year:2009

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2008/2009
SECOND SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR
OF SCIENCE (HOSPITALITY AND TOURISM MANAGEMENT)

HIM 407:
HOSPITALITY FINANCE

DATE: Thursday, 17th September, 2009
TIME: 8.00 a.m. – 10.00 a.m.
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INSTRUCTIONS:
Attempt ALL questions in Section A and B. Attempt only ONE question in Section C.
All monetary value is in Kenya Shillings.

SECTION A
Q.1
A small pub in eastlands has a fixed cost of 50,400. It only sells beer in bottled. The average contribution margin on sales is Shs.2.24. What is the number of bottles that need to be sold to break-even? (10 marks)
Q.2
Define the term rack rate and potential average room rate and explain how you would use the two to gauge management performance. (10 marks)
Q.3
You have been asked to do a feasibility study for a restaurant in downtown Nairobi office building. What general market characteristics do you think would be relevant? (10 marks)

SECTION B
Q.4
A small guest house in Westlands has a fixed cost of 86,000, variable cost of 70% of sales revenue and a tax rate of 25%. The owner of the inn wants an after – tax net income of 30,000. What is the sales revenue that the inn must achieve to provide the 30,000 net income after tax. Discuss your answer. (30 marks)

SECTION C
Attempt
only
ONE question in this Section.
Q.5
The Manager at Safari park Hotel wishes to invest some of his profits. He has two alternative investment possibilities and has requested that you suggest the better investment. The accountant has given you the following annual projected net cash inflows from the two alternatives over a 5 year period. The investment is 33,000.

Year
alternative I

alternative II
1
8000 4200
2
8600 5800
3
8300 8500
4
8200 11500
5
4100 12100
a)
Calculate the payback time of each alternative
b)
Using NPU at 12% would either of them be a good alternative investment for Safari Park hotel? (30 marks)
Q.6
List and discuss four of the necessary steps in hotel room supply and demand analysis, in a feasibility study, demonstrating how to arrive at the “rooms demand gap” of a proposed hotel site. (30 marks)

Hospitality Finance Question Paper

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