Would these motels be better off renting rooms

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Reference no: EM13316777

a. All along the central and northern coast of New south Wales there are motels offering basis accommodation -some of it within easy walking distance of the beach. During the school holidays and at other peak times the room rate is over $150 a night.

But in the off-season, when the kids are back at school, one can find rooms for as little as $60 a night. Assume the average fixed cost of a room per night, including local government rates, insurance, taxes and depreciation, is $75.

The average guest-related cost for a room each night, including electricity, water, cleaning service and linen, is $40. Would these motels be better off renting rooms for $60 in the off season or shutting down until the school holidays come round again? Explain your answer with proper graph/s.

Reference no: EM13316777

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