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If You Can’t Take the Heat, Get Out of the Kitchen: Calculating the Costs of a Fire at Southern Hospitality Inn

Christine Ladwig, Dana Schwieger, Raven Lawhorn
November 1, 2018
Accounting & Finance
10 pages
litigation support, Cost Accounting, cost projections, loss estimations, business interruption
Student Price: 
$4.00 (€3.68)
Average rating: 

Mike Wilson, accountant for Southern Hospitality Inn hotel, was pulling together the projected costs and lost operating revenues of the hotel and the adjoining restaurant, Bridgeton Kitchen, for insurance claim filings following a devastating fire. Because the inn and restaurant had not been in business for even a year before the fire occurred, Mike also needed to rely upon industry projections for similar facilities, rather than historical sales records, to determine lost revenues. Mike had collected all of the data that he needed to start performing the calculations; it was now just a matter of doing the projections. Once the estimations were completed, Mike had to decide what information to provide the insurance company to support the hotel’s claim.

Learning Outcomes: 
  • Estimate the operating revenue losses of a disastrous incident in a commercial setting
  • Estimate the projected revenue based upon historic trends and market conditions
  • Identify sources of alternative financial data for calculating situation costs
  • Identify the steps organizations can take to calculate the costs of a revenue loss incident
  • Identify what information should be provided to insurance companies