Keeping Costs Under Control: Essential Expense Management KPIs for Hotels
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| Keeping Costs Under Control: Essential Expense Management KPIs for Hotels |
Introduction
Controlling costs is essential for hotels to maintain profitability. Key performance indicators (KPIs) are critical tools for tracking and managing hotel expenses. In this article, we will discuss the most important expense management KPIs that hotels should track to keep costs under control.
- Labor Cost Percentage
Labor cost percentage is a KPI that measures the percentage of total revenue that is spent on labor costs. It includes salaries, benefits, and other labor-related expenses. Labor cost percentage is an essential KPI for hotels to track as labor costs are typically one of the largest expenses for hotels.
- Food and Beverage Cost Percentage
Food and beverage cost percentage is a KPI that measures the percentage of revenue that is spent on food and beverage costs. It includes the cost of ingredients, labor, and other related expenses. This KPI is critical for hotels with restaurants and bars, as food and beverage costs can have a significant impact on profitability.
- Utility Cost Percentage
Utility cost percentage is a KPI that measures the percentage of revenue that is spent on utilities, such as electricity, gas, and water. This KPI is essential for hotels as utility costs can vary significantly based on factors such as occupancy and climate. Tracking utility cost percentage can help hotels identify areas where energy efficiency improvements can be made to reduce costs.
- Marketing Cost Percentage
Marketing cost percentage is a KPI that measures the percentage of revenue that is spent on marketing and advertising. It includes expenses such as media buys, promotions, and sponsorships. This KPI is essential for hotels as effective marketing can drive revenue growth, but excessive marketing expenses can lead to decreased profitability.
- Maintenance and Repair Cost Percentage
Maintenance and repair cost percentage is a KPI that measures the percentage of revenue that is spent on maintenance and repair expenses. This KPI is essential for hotels as it can help identify areas where maintenance expenses can be reduced through preventive maintenance and proactive equipment replacement.
- Total Revenue per Available Room (TRevPAR)
TRevPAR is a KPI that measures the total revenue generated per available room, including room revenue, food and beverage revenue, and other revenue sources. This KPI is critical for hotels as it provides a comprehensive view of the hotel's revenue potential and can help identify areas where revenue can be increased.
- Cost per Occupied Room (CPOR)
CPOR is a KPI that measures the total cost of running the hotel per occupied room. It includes expenses such as labor, utilities, and other operating costs. This KPI is essential for hotels as it provides a clear view of the cost of operating the hotel and can help identify areas where cost savings can be achieved.
- Gross Operating Profit per Available Room (GOPPAR)
GOPPAR is a KPI that measures the hotel's profitability after deducting all operating expenses. It is calculated by dividing the gross operating profit by the total number of available rooms. This KPI is critical for hotels as it provides a comprehensive view of the hotel's profitability and can help identify areas where expenses can be reduced to increase profits.
Conclusion
Controlling expenses is critical for hotels to maintain profitability. By tracking these essential expense management KPIs, hotels can make informed decisions about cost reduction strategies, pricing strategies, marketing efforts, and more to keep costs under control and maximize profitability.
