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La Quinta Motor Inns
LaQuinta Motor Inns is a moderately priced chain of motor inns located across the United States. Its primary market is the frequent business traveler. The chain recently launched a campaign to increase market share by building new inns. The management of the chain is aware of the difficulty in choosing locations for new inns. Moreover, making decisions without adequate information often results in poor decisions. Consequently, the chain management acquired data on 100 randomly selected inns belonging to LaQuinta. The objective was to determine which factors were likely to result in an inn being profitable. To measure profitability, LaQuinta used Operating Margin which is the ratio of the sum of profit and depreciation, divided by total revenue. This ratio is then multiplied by 100% to obtain a percentage. The higher the Operating Margin percentage, the more profitable the inn.
After a discussion with a number of experienced managers, LaQuinta management decided to conduct a simple linear regression analysis using the number of motel and hotel Rooms located within five miles of the inn. However, since this analysis used only one independent variable, management decided to conduct a multiple linear regression analysis using Rooms and three additional independent variables:
These four independent variables were:
x1 = Rooms = Number of motel and hotel rooms that were located within five miles of the inn (in thousands);
x2 = Miles = Number of miles that the inn was to the closest competing motel or hotel;
x3 = Office = Number of square feet (in thousands) of office space in the surrounding community;
x4= Enroll = College and university enrollment (in thousands) in the surrounding community.
The dependent variable to be used in analysis remains -- Operating Margin:
Y = Margin = the operating margin of the inn (in percentage terms)
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Obtain, using SPSS and the LaQuinta Data Set which is attached to this e-mail, a multiple linear regression output with the four independent variables defined above and Margin as the dependent variable. Note also on line 101 on the data worksheet is a prediction for Rooms=3.000, Miles=2.0, Office=500 and Enroll=12. Using your regression output, answer the questions below. Type in your answers in the space provided under each question – make additional room if you need it. A...
