Benchmarking Beyond Labor

What Other Expenses Should Hoteliers Be Concerned About?

Everyone knows that labor is the biggest cost for hotels, comprising roughly 50 percent of all operating expenses. Further, the current tight labor market, combined with recent wage-related legislation, is putting upward pressure on salaries, wages, and benefits.

What often gets overlooked is the other 50 percent of expenses. Some operating costs have been rising at a greater pace than labor. Conversely, hotels have benefited from a decline in certain expenses that has helped to boost the bottom-line.

The following statements highlight hotel expenses beyond labor observed during 2018 that owners and operators should keep an eye on. The data represents the aggregate performance of the 7,000+ U.S. hotels that voluntarily submitted data to CBRE Hotel Research’s annual Trends® in the Hotel Industry survey:

  • ​Within the rooms department, commissions increased by 0.4 percent. Are you controlling your distribution channels to minimize payments made to intermediaries?
  • Credit card commission payments increased by 1.8 percent, while total revenue grew by 2.6 percent. Are you able to keep credit card related fees from rising at the pace of revenue?
  • Conversely, franchise (3.1%) and management fees (2.8%) are rising at a pace greater that revenues. Are you monitoring the myriad of fees being charged by your franchise and management companies?
  • After three years of declining utility costs, these expenses have risen 1.4 percent each of the past two years. How effective are your green and sustainable practices?
  • Property taxes and insurance averaged 3.6 and 0.8 percent of total operating revenue respectively during 2018. Do you need to contest your property assessment, or review your insurance contract?
CBRE’s annual Trends® in the Hotel Industry survey tracks over 250 unique revenue and expense items. Using CBRE’s online BenchmarkerSM service owners and operators can compare the efficiency of the operations at their hotels against the aggregate performance of comparable properties selected on a custom basis.​

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