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Understanding Key Variable Costs in Hotel Management: A Guide for Prudent Pricing and Marketing Decisions | Hotel Marketing
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Hotel managers must know the average costs per occupied guest room to create the correct pricing and marketing decisions and monitor expenses. Depending on the property type, this average cost per night ranges from $12 for a budget property to more than $75 for a high-class property. To determine the expenditures per occupied guest room, here are the six most critical variable costs that must be considered.

First is labor. To calculate the average labor cost per occupied guest room, get the total labor costs plus benefits expense for any specified period and divide it by the number of guest rooms serviced during that period. Only include the labor costs for housekeeping employees who provide guest room services during that time.

Second are cleaning supplies and amenities. Compute the average costs incurred to replace consumable amenity items such as soap, shampoo, conditioner, lotion, toilet paper and tissues, tea, milk, and coffee. The replacement costs for these amenity items vary per property type. For instance, in limited-service hotels, the replacement costs will only be under $1 per occupied guest room, while in luxury hotels, these would be more than $20. In addition, the average cost of chemicals and cleaning supplies should also be included. These constitute the disinfectant glass cleaner, toilet cleaner, and furniture polish. Nonetheless, having your list of these amenity items is best to get an accurate replacement cost.

The third is laundry expenses. Bed and bath linens should be washed after a few days of your guest’s arrival, depending on their request and after they check out. To compute the average laundry costs per occupied guest room, get the sum of labor, laundry chemical, and utility costs and divide this sum by the number of occupied guest rooms within that period.

Fourth, utilities. Occupied guest rooms will use lights, TVs, showers, heating or air conditioning units, and electricity when guests charge their phones, tablets, laptops, and other electronic devices. Likewise, even cleaning these occupied guest rooms will require energy and water. However, determining the energy consumption per occupied guest room is challenging since each is not metered individually. Therefore, you need to estimate the energy consumption for each occupied guest room. Begin by getting the energy usage during high and low occupancy days and the data on the number of occupied rooms. Working through these numbers, you will arrive at a reasonable estimate of your utility expense per occupied guest room.

The fifth is the allocated budget for the renovation. Generally, hotels renovate their guest rooms every 4 to 7 years. This renovation depends on the occupancy levels, type of hotel, guest segmentation, geographic location, and brand requirements. A tip for your renovation budget is to take 3% of the room rate and put it as part of your capital expenditure for room renovation. So, if your guest room is charged at $100 per night, then the capital expense of this guest room is $3 per occupied night.

Lastly are reservation fees, commissions, and marketing expenses. These variable expenses may not be part of housekeeping-related costs; however, these are also expenses correlated to each occupied guest room. Thus, these variable expenses must be given to your hotel franchise, distribution channels, and booking partners.

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