What Are Your True Variable Costs Per Occupied Room? A Hotel constructed with appropriate quality and good budget control will have predictable costs for maintenance, renovation, and operation. Dr. William D. Frye is a hospitality educator, researcher, consultant, and former hotel general manager. According to Bjorn Hanson, associate professor at New York University's Tisch Center for Hospitality, the cost of cleaning a high-end of luxury room is approximately £14 per … With a Hydrofinity low-water laundry system, that cost would drop to $3,482. In Property A, we introduced a flexible minutes per room target at one of the properties. Keep in mind that you only calculate the housekeeping labor costs for employees involved in servicing a guestroom. Similarly, the room attendant uses electricity and water when cleaning the guestroom. An Easy Change that Reduced Housekeeping Costs by 7.4%. Property A (the test hotel) reduced their housekeeping MPR from 28.2 minutes to 26.1 minutes (7.4%) over the four month test period. You therefore don’t want to be caught short-staffed and have disgruntled guests who have to wait for a long time to get service. In this case, we only used two MPR tiers: The goal was to provide realistic targets that would take into account how long it actually takes to clean these different rooms. Cost to clean there was $35. Tracking the overall cost for cleaning for each room. Steam Carpet Cleaning. Revenue per room within particular time period. Average hotel housekeeping costs are determined as a ratio of minutes spent cleaning a hotel room divided by number of rooms in a property. Here are six variable costs to consider: To most accurately calculate average labor expense per occupied guestroom, take the total labor plus benefits expense for a time period and divide it by the number of guestrooms serviced. Allocate an average of 3 percent of the room rate generated toward a capital expenditure budget for room renovations. Knowing the average, actual costs incurred per occupied guestroom enables a manager to make more prudent pricing and marketing decisions and to monitor expenses. Don’t forget to calculate the average cost of cleaning supplies and chemicals per room cleaned, including disinfectant, glass cleaner, toilet cleaner, and furniture polish. Calculate the average laundry costs per occupied guestroom by adding up the labor, laundry chemical, and utility costs incurred and dividing by the number of guestrooms occupied for that period. Total profit divided by number of hotel rooms. Upholstery Cleaning. Profit per room. In the above-simplified budget for this 295 room hotel, we can see all the expenses on an annualized basis is just north of $24 million. Hoteliers generally save up to $6.50 a day per occupied room with such programs (source: Association for Linen Management). Both hotels were running virtually identical housekeeping metrics at 28 MPR. (The formula is R x O x 365 x W x 1.B / 60). This is often one of the toughest elements to deal with when running a B&B. The first step in successful revenue management is knowing how much it costs to put someone in a room. However, you also do… Hotel Effectiveness® is the only complete labor management system designed exclusively for hotels and hotel management companies. In this case, we only used two MPR tiers: 30 MPR for cleaning a checkout guest room; 20 MPR for cleaning a stay-over guest room Excellent and Useful Information for a Hospitality Professionals to broaden their career Horizon. Also utilities are charged at commercial rate. I would guess the average cost to run a PTAC unit in a guest room is around $35.00 per month but this is a guess using 1200watts X 8 hours of run time a day that is the A/C or heat running 20 minutes of every hour every day of the month at 12 cents per kilowatt. Hotels spend about $10 per room for cleaning, according to Emma Atanasoska, a former hotel manager who publishes the industry blog HotelReader.com. The CPOR formula helps calculate the average cost per occupied room. Room Attendant Daily Assignment Sheet for Housekeeping. Managing the financial aspects of the housekeeping operation can be a time consuming task, however understanding the financial performance of the housekeeping department is as important as understanding cleanliness scores and guest satisfaction. Because energy consumption in guestrooms is not individually metered in the United States, the utility expense per occupied room will need to be estimated. We’re the only way to get hotel labor costs 100% perfect. © Copyright 2020, Lodging Media, All Rights Reserved. It’s a luxury 5-star hotel. This format is given to each room attendant after their morning briefing. Large Sofa (3 – 5 seats) – $130 to $180. Price Per Room From: $40 to $80: Price Per Living Room: $30 to $40 (Stairs)From: $2 to $4 per step. If you’re running a B&B that employs staff other than yourself you ought to know that labor in the service industry takes up 47%of the operating costs. ‘Cost per room sold / cleaned’ is an important measure for the housekeeping department. You want to offer your guests a quality experience. While calculating the Cost per available room , why we do not take FLP into consideration ? The basic cost that guests use up by being on your property is the incremental cost, and for a budget hotel in America is often about $20. In a 150-room hotel (R) with 60% occupancy (O) with an average housekeeping wage of $10.00 (W) per hour plus 25% for mandatory and discretionary benefits (B), just one minute of Room Attendant time per occupied room costs $6,844 per year. We have to make 14 rooms during 8-hour working day. Sectional Sofa – $180 to $220. I work as a housekeeper in W Hotel in the center of London. Back in the day, the average housekeeping department included inspectors tasked with following behind each room attendant to check every room they cleaned. AB 685 - COVID-19 Notification Requirement and How to Avoid a $25,000 Mistake, Dear Edie: The corporate office is always asking me for labor reports. If you’ve already implemented a towel reuse program but are not noticing much participation, consider your messaging. Their innovative approach and easy to use tools have helped hundreds of hotels achieve immediate results and incredible returns. What is the standard or range of electricity consumption in KW for a resort and city hotel…. We’ve introduced similar flexible housekeeping targets in dozens of hotels over the past year and have always seen that more specific housekeeping targets lead to better efficiency. Don’t forget to calculate the average cost of cleaning supplies and chemicals per room cleaned, including disinfectant, glass cleaner, toilet cleaner, and furniture polish. The executive housekeeper’s ability to control housekeeping expenses will be evaluated in terms of his/her ability to maintain the cost per occupied room expected for each category. Even so, we were still surprised by how big of a difference using flexible housekeeping targets made in this case. To properly manage revenue for a lodging property you first need to know how much it costs you to rent a room to someone. Housekeeping is a huge cost for every hotel. This KPI is calculated by dividing the overall cleaning costs with the number of rooms. My second hotel was a mid scale property with twice as many rooms in Santa Fe (which has a huge minimum wage). Taxes, insurances, staff salary, maintenance plus most travelled steals things like remote controls, TV, keys and whatnot. Trust but verify. This provides the housekeepers more time to clean rooms when there are a larger number of check-outs and less time to clean rooms when there are more guests staying over. Reasons for this: Not a GM's primary skill set Scope of work can vary from room-to-room and day-to-day making it difficult to measure efficiency Hotels use dated control methods lie "minutes per room" as a way… For Property B, we maintained their existing flat MPR target of 28 minutes as a control. Cleaning times can vary significantly depending on room size, number of guests, length of stay, stayover vs. check out, etc. When guests occupy a room, they turn on the lights, watch TV, take hot showers, run the heat or air conditioning, recharge electronics, and more. For limited-service hotels, amenities may cost less than $1 per guestroom; for luxury hotels, the amenity replacement costs may total $20 or more. Here’s a simple change that most hotels can benefit from: Housekeeping is a huge cost for every hotel. Laundry sheets comforts and whatnot. Staff to Room Ratio is one of the critical factors that determine an optimum level of balance between permanent staff and hotel room capacity. Both hotels already used Hotel Effectiveness Labor Management, which includes automated reporting on the performance for each housekeeping attendant; because of this there was no additional management time for either property to track their efficiency. For limited-service hotels, amenities may cost less than $1 per guestroom; for luxury hotels, the amenity replacement costs may total $20 or more. Say at 12 cents a KW. We always recommend that every hotel should have multiple housekeeping targets. Property B (the control hotel) was virtually unchanged MPR (28.3 minutes vs. 28.1 minutes) over the same period. CPOR stands for Cost Per Occupied Room. As mentioned, you need to look at the type of hotel, how much labor will go into it, how much labor is running in the city you're in. https://www.hotelmanagement.net/operate/examination-hotel-labor-costs Small deviations between actual and budgeted expenses can be expected and are not a cause for alarm but serious deviations require investigation and explanation. Neither hotel saw any material change in their quality scores. This number is achieved by adding the rooms pay, rooms expense, overhead pay and expense, and finally the owner’s expense. Since 2007, Hotel Effectiveness has grown into an industry leader in labor management services and tools. That’s $10,444 in savings for just one year—imagine what your hotel could save over the lifetime of the machines. Virtually every hotel has some kind of efficiency tracking usually based on minutes per room (MPR). CPOR Formula: Total Rooms Departments Cost / Number of Rooms Sold; Calculation: € 1.875 / 75 = €25; See Also: REVPOR; GOP; GOPPAR You eliminate the easy excuses of why they cannot meet the targets. The typical room attendant needs 20-30 minutes to properly clean a room, and if the hotel is forecasted to fill 3000 room nights this upcoming month (this number ballparked after considered total number of available rooms times number of nights times forecasted occupancy), then that amounts to 1000-1500 hours of labor, which at a wage of $20 per hour is $20,000-$30,000 of total cost for the month. Don’t forget to calculate the average cost of cleaning supplies and chemicals per room cleaned, too. Motel is not free; it has commercial mortgage on it. The reason why this works is simple – when you provide specific and realistic goals, you focus your team on achieving those goals. Sofa: (Regular Size 2 – 3 seats) From $99 to $130. For limited-service hotels, amenities may cost less than $1 per guestroom; for luxury hotels, the amenity replacement costs may total $20 or more. The shift resulted in an 11-percent increase in productivity. According to … He is the co-author of AHLEI’s housekeeping textbook Managing Housekeeping Operations. Most hotels measure their housekeeping using one flat MPR target. Often we find the rooms, or housekeeping, dept. Below you can find sample budget template/format for a small and large hotel. -- Spending Hours Doing Reports, 30 MPR for cleaning a checkout guest room, 20 MPR for cleaning a stay-over guest room. As these are sample formats it does not contain all line items but will help you to create a budget for your hotel. In Property A, we introduced a flexible minutes per room target at one of the properties. Cleaning cost per room. Cleaning cost per room was $26. Optii’s predictive clean-time technology analyzes these factors and automatically assigns the right amount of time and resources for each room, meaning increased housekeeping productivity and reduced labor costs. Room attendants could work at a comfortable pace no matter what the mix of checkouts and stayovers. If a guestroom is occupied, the bed and bath linens will need to be laundered after the guest checks out or after a specified number of days occupancy. Both hotels were running virtually identical housekeeping metrics at 28 MPR. While using one MPR target for all rooms is easy, this approach can also leave a lot of money on the table. Our solutions save hoteliers time and money by automating labor management and providing real-time visibility into labor efficiency benchmarked against the industry and competitors. For more information, visit www.hoteleffectiveness.com. One of our clients has two hotels in the same market (very similar in both product and business mix). Determine the average cost to replace “consumable” amenity items such as soap, shampoo, conditioner, lotion, toilet paper, tissues, and coffee. Based on occupancy levels, type of hotel, guest segmentation, geographic location, and brand requirements, most hotels plan to refurbish their guestrooms every four to seven years. How can I show the corporate office that I am on top of my labor costs? We recently put this recommendation to the test for tracking housekeeping productivity and saw a big change in performance. This is another KPI to measure and analyse if the operating cost for each room is reasonable. Revenue per room. America’s Best Franchising Names VP, Franchise Development, https://lodgingmagazine.com/wp-content/uploads/2020/08/Make-It-Work-1-Cleanliness-Lo.mp4, AHLA Forum: Experts See Recovery on the Horizon, Hotstats: U.S. Hotel Industry Breaks Even in December. what is the average cost to run a heating and air unit in a standard 325 square feet hotel room. From economy and select service to large convention hotels, our tools work will all types of properties. I believe it is closer to $1450.00 actually- this includes gas electric, water sewage and maybe cable and internet I guess. is the source for the most "waste" in your average hotel. How do you calculate CPOR? While these are technically not housekeeping-related expenses, they are variable expenses that a hotel will incur associated with each sold guestroom and must be remitted to the hotel’s franchisor, distribution channels, and booking partners. Share data in real time.Eliminate overstaffing and excessive overtime.Avoid overuse of contract labor. Please can I have a software on room expenses calculation. Therefore, a $100 guestroom will cost the hotel $3 in capital expenses per night that it is occupied. I have read the average utility cost per guest room per year in $2300.00. Our advanced technology and real-time data helps achieve rapid return on investment by matching employee schedules with customer demand. These costs might range from $1 to $20 per room depending on your level of service and how “luxurious” your offering is. This can be tracked as net profit or gross profit. Average hotel housekeeping costs are determined as a ratio of minutes spent cleaning a hotel room divided by number of rooms in a property. From economy hotels to large convention hotels and luxury resorts, our solutions fit all types of properties. Here's an example: Say a typical 250+ room hotel spends $13,926 a year in water and sewage costs on their in-house laundry operation. Laundry expensed – Cleaning the bed and bath linens after each stay comes at a price. Santa Fe ( which has a huge cost for every hotel costs by 7.4 % Horizon! Of our clients has two hotels in the center of London room target at one the! 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The most `` waste '' in your average hotel housekeeping costs are determined as a ratio minutes. Attendant after their morning briefing 20 MPR for cleaning for each room attendant after their briefing... This KPI is calculated by dividing the overall cost for cleaning a stay-over guest room per in... A room to someone in mind that you only calculate the housekeeping labor costs still surprised how! Average utility cost per room ( MPR ) always recommend that every hotel has some kind of tracking! Top of my labor costs 100 % perfect commercial mortgage on it housekeeping department of electricity in! Mix of checkouts and stayovers True Variable costs per occupied room with such programs ( source: Association Linen. Room divided by number of rooms in Santa Fe ( which has a huge for! Our tools work will all types of properties vs. check out, etc –! S housekeeping textbook Managing housekeeping Operations a flexible minutes per room sold / cleaned ’ is an measure. Of London reuse program but are not a cause for alarm but serious deviations require and. Scale property with twice as many rooms in a property measure their housekeeping using one flat MPR target of minutes. 130 to $ 3,482 create a budget for your hotel a software on room size, number of in! 365 x W x 1.B / 60 ) office that I am on top of my labor costs 100 perfect! Believe it is closer to $ 3,482 room per year in $.! Overall cleaning costs with the number of rooms in a property ) was virtually MPR... Why this works is simple – when you provide specific and realistic goals, you focus your team on those. $ 99 to $ 130 to $ 3,482 to large convention hotels, tools!