19/01/2023
Let’s Learn about the Hotel with 2 minutes of reading:
Question: What Kinds of Hotel Costs Do You Take into Account When Pricing Rooms?
Answer: Costs are some of the main factors to be considered in Pricing the property right. Below are the notable mentions:
1. Quality of the property
2. Competition checks
3. Market trends
4. Events in your vicinity
5. Historical performance of the property
6. Forecasting
7. Dynamic evolution of initial pricing
Consider Your Fixed Costs?
When we talk about fixed costs, we refer to those costs that remain the same regardless of the volume or number of rooms sold.
For example:
1. Rent/mortgage.
2. Insurance and taxes.
3. Fixed monthly bills, like TV and internet.
4. Staff salaries and other payroll costs.
5. Marketing/advertising costs.
Let’s take the total fixed costs of any accommodation, hospitality, or lodging facility, divide them by the number of rooms and then by the number of working days (e.g., Rs. 1,000.000 / 100 rooms / 365 days = Rs. 27).
That small 2-digit number represents the daily fixed unit cost that each room costs you, whether it’s occupied or not.
Revenue management requires a different frame of reference. Instead of thinking, “unsold room,” you’ll think “permanent loss of money.” That’s a significant shift.
What About Those Variable Costs?
Now, let’s look at the variable costs. These are the costs that vary with your business volume and that the hotel incurs only if the rooms are occupied by some guests.
For example:
The room courtesies: slippers, pencils, pens, notebooks, etc.
Bath courtesies: soaps, bath foam, caps, toilet paper, etc.
Laundry: sheets, pillowcases, towels, etc.
Utilities: water, electricity, and any gas
The breakfast (the food cost) when included in the room rate
The possible room cost for a housekeeping attendant if you use an outsourced service (i.e., relying on companies to recruit attendants.)
Sales channels commissions
