More of a snapshot of that individual department. STR's profitability database gives you the industry's most comprehensive, accurate and actionable data insights on hotel revenue and expenses. High expenses and wasteful practices deplete profit margins and threaten a property’s financial health and long-term viability. According to a CBRE survey of over 7,000 hotels, during 2018, property taxes averaged 3.6 percent of total operating revenue, and insurance costs averaged 0.8 percent… Computing this metric for information technology is a logical extension. On the other hand, proper cost management primes your property for … In considering IT spending as a percentage of revenue, the first important principle is that this metric varies greatly by industry. In cases like these, 20-25% of annual revenue spent on marketing is common. In the case of departmental revenues you can look at what percentage of your departmental revenues are spent on labor costs or departmental operating expenses. The operating expense ratio (OER) is defined as a measurement of the cost to operate a piece of property compared to the income brought in by the property. Finally, you can also calculate ratios as a percentage of revenues. This expense ratio was the greatest at extended-stay hotels (4.2%), and lowest at suite hotels with food and beverage (2.9%). How to calculate percentages of total revenues Scaling each company's operating profits to its revenue allows us to make a better like-for-like comparison with regard to company profitability. Keeping hotel operating expenses under control is key to running a successful property. Depreciation Expense). It also is important for all of the hotel’s financial calculations as it determines how many operable rooms there to base revenue formulas off of. HOTEL EXPENSE ACCOUNTING. STR's International Profitability Program In the accounting terminology, expense is an income statement account representing the cost of items consumed in the process of generating revenue (ex. For the hotels that reported paying a management fee in 2015, the combined payments for the base and incentive fees averaged 3.5 percent of total revenue. 3. Cost of Goods Sold) or that expires due to the passage of time (ex. This could be by department or by total hotel revenue. detailed breakdowns of departmental revenue and expenses, in-depth performance analyses, year-over-year comparisons and enhanced benchmarking offerings. Analyzing the 2005 data by the various types of hotels, PKF-HR finds that maintenance expenses range from a low of 4.7 percent of total revenue at convention hotels to a high of 5.5 percent … For example, they look at sales expense, marketing expense, and accounting costs all calculated as a percentage of revenue. 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