Operating costs at a hotel
If you want to open a hotel or lease an existing one, the question arises, among other things, of turnover and, above all, operating costs. For a business evaluation it is necessary to analyze the costs. The exclusive consideration of sales harbors the risk that an actually unprofitable company is represented with apparently good earnings.
You want to take over a hotel on a lease basis. You have the sales figures of the house and the amount of the monthly rent. What is missing is a consideration of the operation from the point of view of the operating costs.
The business method is preferable to the sales method
- If you only compare the turnover with a rent (rent method), economic factors are left out. High costs can potentially make your business unprofitable. Such a consideration is not sufficient, especially in the context of borrowing.
- The business method enables you to determine the net income of a hotel. This results from operating-related sales reduced by operating-related expenses. Debt and equity interest, repayments, building depreciation as well as are not taken into account steer on income and earnings.
- The operating result obtained in this way must be modified further. Starting business in particular can cause some teething problems for the first one to three years.
- A net income cannot simply be capitalized, because you, as the operator, also want to achieve a reasonable profit.
Tenants must regularly pay advance payments for cold operating costs. The …
Operating costs at a hotel
- The operational costs of a hotel include all those that are incurred in ongoing business operations. Individual items represent goods, personnel, energy costs and taxes / insurance / contributions as well as operating and administrative costs.
- Operating costs also include expenses for laundry, cleaning, vehicles, equipment, music / entertainment as well as depreciation and losses (spoilage and breakage of inventories).
- In the case of a new hotel building, you can only see the actual operating costs during ongoing operations. It is not uncommon for these to be far higher than actually calculated.
- Avoidable costs arise, for example, from facilities and furniture that wear out or break quickly. Equipment that consumes permanent energy also has a negative impact on the operating result.
Other aspects include insufficient supervision (hotel cleaning), unfavorable contracts (purchasing) and poor agreements with event customers. These are all costs that you, as a hotel operator, have to keep in mind before and of course during operation if you want to realize a profit that can be used personally.
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