Abstract
The majorpurpose of this research is the comparison of performance variables of highly profitable hotel/motel operations with marginally profitable or losing operations to determine which variables have a significant Impact on profitability.
The study involves forty mid-priced hotels/motels in Virginia, Maryland, Penn
sylvania and South Carolina. Balance sheet and profit and loss data from these
properties were analyzed fortwo concurrent fiscal years. The profitability measures,
expressed as ratios, used in this study are: (a) hotel/motel operating margin, (b)
hotel/motel return on assets, (c) rooms department operating margin, and (d) food
and beverage operating margin. Fifteen variables were analyzed to determine if their
means were significantly different. The rooms department was found to be the
primarygeneratorof profits. Five key variables showed a significant relationship with
total or consolidated profitability. The key variables were: occupancy rate, rooms
sales as a percentage of total sales, rooms department labor cost percentage, food
costpercentage and propertytax percentage.
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