Calculating + Controlling Your Hotel Operating Costs

With so many operational costs to juggle, staying profitable requires a detailed plan. That's where this guide to calculating and controlling your hotel operating costs comes in handy.
So, should you just worry about “heads in beds” to keep revenue flowing? Not exactly. A hotel operating expenses breakdown below reveals that there’s much more to operations management than this simple principle.
If you’re hoping to better manage your hotel operating budget, the guide below is just what you need. You’ll find a helpful hotel operating expense ratio, actionable strategies for lowering operating costs, and more.
What’s included in hotel operating costs?
Let's dig in to what makes up hotel operating costs. The first step in better managing your hotel's expenses is understanding your current costs. Hotel operating costs can be broken down into two main categories: fixed and variable.
Fixed costs
No matter what occupancy the hotel is at, these costs remain in place. Because the hospitality industry is service-focused, employee wages often make up a large chunk of fixed costs. From the concierge to cooks to the housekeeping, there are many staff members on the payroll at all times. This is why labor costs are typically the largest part of average hotel operating expenses.
Other costs that fall into the fixed costs category include:
Rent and property taxes
Human resources
Employee healthcare premiums
Contracted services (example: security)
Internet, phone, and television
Hotel management software