Occupancy goal: 29,200 room-nights = 80% occupancy rate × 100 rooms × 365 days Compensation: 15% weight × $50,000 target bonus = $7,500 $7,500/29,200 = $0.2568 per room-night Expense goal: 5% savings Compensation: 35% weight × $50,000 target bonus = $17,500 $17,500/5 = $3,500 for each percentage point saved Room rate goal: $5 rate increase Compensation: 35% weight × $50,000 target bonus = $17,500 $17,500/500 = $35.00 for each cent increase Energy use goal: 10% savings Compensation: 15% weight × $50,000 target bonus = $7,500 $7,500/10 = $750 for each percentage point saved Kristin’s new compensation plan will thus pay her a $73,000 salary plus 25.68 cents per room-night sold plus $3,500 for each percentage point saved in the expense budget plus $35 for each cent increase in the average room rate plus $750 for each percentage point saved in energy use. The minimum potential compensation would be $73,000 and the maximum potential compensation for Kristin would be $73,000 + $50,000 = $123,000 Required: 1. Based on this plan, what will Kristin’s total compensation be if her performance results are (Round your answers to the nearest whole dollar amount.) a. 30,000 room-nights, 5% saved, $5.00 rate increase, and 8% reduction in energy use? b. 25,000 room-nights, 3% saved, $3.15 rate increase, and 5% reduction in energy use? c. 28,000 room-nights, 0% saved, $3.00 rate increase, and 2% reduction in energy use?
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Kristin Helmud is the general manager of Highland Inn, a local mid-priced hotel with 100 rooms. Her job objectives include providing resourceful and friendly service to the hotel’s guests, maintaining an 80% occupancy rate, improving the average rate received per room to $101 from the current $96, achieving a savings of 5% on all hotel costs, and reducing energy use by 10% by carefully managing the use of heating and air conditioning in unused rooms and by carefully managing the onsite laundry facility, among other means. The hotel’s owner, a
| Measure | Percent of Total Responsibility | ||||
| Occupancy rate (also reflects guest service quality) | 15 | % | |||
| Operating within 95% of expense budget | 35 | ||||
| Average room rate | 35 | ||||
| Energy use | 15 | ||||
| 100 | % | ||||
If Kristin achieves all of these goals, the partners determined that her performance should merit a bonus of $50,000. The partners also agree that her salary will need to be reduced to $73,000 because of the addition of the bonus.
The goal measures used to compensate Kristin are as follows:
| Occupancy goal: | 29,200 room-nights = 80% occupancy rate × 100 rooms × 365 days |
| Compensation: | 15% weight × $50,000 target bonus = $7,500 |
| $7,500/29,200 = $0.2568 per room-night | |
| Expense goal: | 5% savings |
| Compensation: | 35% weight × $50,000 target bonus = $17,500 |
| $17,500/5 = $3,500 for each percentage point saved | |
| Room rate goal: | $5 rate increase |
| Compensation: | 35% weight × $50,000 target bonus = $17,500 |
| $17,500/500 = $35.00 for each cent increase | |
| Energy use goal: | 10% savings |
| Compensation: | 15% weight × $50,000 target bonus = $7,500 |
| $7,500/10 = $750 for each percentage point saved | |
Kristin’s new compensation plan will thus pay her a $73,000 salary plus 25.68 cents per room-night sold plus $3,500 for each percentage point saved in the expense budget plus $35 for each cent increase in the average room rate plus $750 for each percentage point saved in energy use. The minimum potential compensation would be $73,000 and the maximum potential compensation for Kristin would be $73,000 + $50,000 = $123,000
Required:
1. Based on this plan, what will Kristin’s total compensation be if her performance results are (Round your answers to the nearest whole dollar amount.)
a. 30,000 room-nights, 5% saved, $5.00 rate increase, and 8% reduction in energy use?
b. 25,000 room-nights, 3% saved, $3.15 rate increase, and 5% reduction in energy use?
c. 28,000 room-nights, 0% saved, $3.00 rate increase, and 2% reduction in energy use?
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