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If you don’t plan and track your hotel budget properly, you're setting yourself up for failure.
When we developed our strategy pack for hotel owners, we saw a lot of hotel owners struggling with finances and planning.
They were disorganized, had no grasp of cash flow, and were drowning in financial troubles despite having substantial occupancy rates.
Don’t let this be you—stand out and succeed.
We’ve created a small, free tool to help you get started: our Budget Tracker and Planner. Let’s turn your hotel's finances around and set you on the path to success!
Get the budget tracker tailored for hotels
Most hotel owners don't know how to plan and track their budget. This spreadsheet will help you.
Example of a full budget for hotels
Here is an example of a (very) detailed budget for a hotel, to give you some inspiration
1. Rent and Utilities
| Item | Description | Monthly Cost | Annual Cost |
|---|---|---|---|
| Rent | Lease for hotel property | $10,000 | $120,000 |
| Electricity | Power consumption for rooms, lobby, and facilities | $2,000 | $24,000 |
| Water | Water usage for rooms, laundry, and facilities | $1,000 | $12,000 |
| Gas | Gas for heating and hot water | $500 | $6,000 |
| Internet & Phone | Internet service and business phone | $300 | $3,600 |
| Waste Removal | Garbage and recycling services | $200 | $2,400 |
| Pest Control | Monthly pest control services | $100 | $1,200 |
| Insurance | Property and liability insurance | $1,000 | $12,000 |
2. Salaries & Wages
| Position | Number of Employees | Monthly Cost per Employee | Total Monthly Cost | Annual Cost |
|---|---|---|---|---|
| General Manager | 1 | $5,000 | $5,000 | $60,000 |
| Front Desk Staff | 4 | $2,500 | $10,000 | $120,000 |
| Housekeeping Staff | 6 | $2,000 | $12,000 | $144,000 |
| Maintenance Staff | 2 | $2,500 | $5,000 | $60,000 |
| Concierge | 1 | $3,000 | $3,000 | $36,000 |
| Security Staff | 2 | $2,500 | $5,000 | $60,000 |
3. Room Supplies & Amenities
| Item | Description | Monthly Cost | Annual Cost |
|---|---|---|---|
| Room Supplies | Linens, towels, toiletries, etc. | $3,000 | $36,000 |
| Minibar Stock | Snacks, beverages, etc. | $1,000 | $12,000 |
| Cleaning Supplies | Detergents, sanitizers, etc. | $500 | $6,000 |
| Guest Amenities | Shampoo, soap, coffee, etc. | $1,000 | $12,000 |
| Maintenance Supplies | Tools, repair materials, etc. | $300 | $3,600 |
4. Marketing & Advertising
| Item | Description | Monthly Cost | Annual Cost |
|---|---|---|---|
| Online Advertising | Google Ads, Facebook Ads, etc. | $500 | $6,000 |
| Social Media Management | Managing social media accounts | $700 | $8,400 |
| Print Advertising | Flyers, posters, newspaper ads | $300 | $3,600 |
| Website Maintenance | Hosting, domain, updates | $200 | $2,400 |
| Email Marketing | Email campaigns and newsletters | $200 | $2,400 |
| Promotional Events | Special events and promotions | $300 | $3,600 |
5. Miscellaneous Expenses
| Item | Description | Monthly Cost | Annual Cost |
|---|---|---|---|
| Equipment Maintenance | Regular maintenance of hotel equipment | $1,000 | $12,000 |
| Uniforms | Staff uniforms and attire | $300 | $3,600 |
| Licenses & Permits | Health permits, business licenses, etc. | $200 | $2,400 |
| POS System | Point of Sale software and hardware | $200 | $2,400 |
| Contingency Fund | Emergency repairs and unexpected costs | $1,000 | $12,000 |
| Office Supplies | Stationery, pens, printer ink, etc. | $200 | $2,400 |
| Staff Training | Training programs and materials | $300 | $3,600 |
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What are the biggest expenses for a hotel?
Be mindful of these significant expenses. Here are five major costs every hotel owner needs to consider, along with some tips on how to manage them effectively.
- Room and amenity costsThese can consume a large portion of your budget. You're dealing with perishables like toiletries and linens, and prices can vary based on seasonality, supply chain issues, and quality. To keep these costs in check, focus on bulk purchasing, negotiate better prices with suppliers, and minimize waste. It's easy to overspend by buying too much or opting for high-end amenities that don’t add enough value.
- The staff at your hotelYour staff is your backbone, but paying for their wages, benefits, and training can be expensive. This cost is always high because you need a certain number of employees to provide excellent service and keep things running smoothly. You can optimize labor costs by scheduling efficiently, cross-training staff, and monitoring productivity. However, be careful not to underpay or overwork your staff, as this can lead to high turnover and poor service.
- Rent and utilities of your hotelPrime locations come with high rent, but they can attract more guests. Utilities like electricity, gas, and water are essential but add up quickly. To optimize these costs, negotiate favorable lease terms and invest in energy-efficient appliances and lighting. Overspending often happens when you choose a location that's too big or too luxurious for your needs.
- MarketingYou need to get the word out about your hotel, but advertising can be pricey, whether it's online ads, social media campaigns, or traditional media. Optimize this expense by focusing on cost-effective methods like the ones we give in our pack. Overspending can happen if you invest in flashy campaigns without a clear return on investment.
- Hotel equipment and maintenance costsThis includes everything from room furnishings to lobby decor. These are expensive because quality equipment and regular maintenance are crucial for smooth operations and guest satisfaction. Optimize by investing in durable, energy-efficient equipment and maintaining it regularly to avoid costly breakdowns. You can overspend by going for the latest high-tech gadgets you don’t really need.
How to spend less with your hotel?
Here are practical tips to help you, as a hotel owner, optimize your budget and manage expenses more effectively.
| Expense | Tips to Optimize |
|---|---|
| Room Supplies | Partner with local suppliers for bulk purchases of toiletries and amenities at discounted rates. |
| Labor Costs | Implement a scheduling software to optimize staff hours and reduce overtime. |
| Utilities | Install LED lighting and energy-efficient HVAC systems. |
| Marketing | Run social media contests for your hotel and collaborate with travel influencers for free exposure. |
| Cleaning Supplies | Train housekeeping staff on efficient use of cleaning supplies to reduce waste. |
| Equipment Maintenance | Set up a maintenance log for regular equipment checks and servicing. |
| Rent/Mortgage | Negotiate lease terms during renewal or consider moving to a less expensive location. |
| Insurance | Regularly review insurance policies to ensure they meet current needs and compare rates annually. |
| Guest Amenities | Use cost-effective, eco-friendly products and offer discounts for guests who opt out of daily housekeeping. |
| Furniture and Fixtures | Purchase high-quality, durable furniture that can withstand frequent use. |
| Booking System | Choose a booking system that offers essential features with low transaction fees and integrates with other systems. |
| Staff Training | Conduct regular in-house training sessions and use free online resources. |
| Waste Management | Implement a waste tracking system to minimize waste and donate excess items. |
| Technology | Invest in multi-functional appliances and utilize hotel management software for reservations and guest services. |
| Linen and Laundry | Partner with a cost-effective linen service and consider reusable options for napkins and tablecloths. |
| Menu Printing | Use digital menu boards or QR codes for room service menus to reduce printing costs. |
| Licensing and Permits | Stay up-to-date with local regulations to avoid fines and costly renewals. |
| Transportation | Plan shuttle routes to maximize efficiency and reduce fuel costs. |
| Office Supplies | Purchase supplies in bulk and go paperless where possible with digital systems. |
| Inventory Management | Use inventory management software to track stock levels and reduce spoilage. |
| Pest Control | Schedule monthly pest control services and maintain cleanliness standards to prevent infestations. |
| Music and Entertainment | Use a streaming service for background music and host local musicians during off-peak times. |
| Uniforms | Choose durable, easy-to-clean uniforms and offer staff a stipend for maintenance instead of using an external service. |
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Expenses that are just useless for a hotel
Yes, some expenses for your hotel are just unnecessary. They don't contribute to increasing revenue or improving guest experience.
| Hotel Expense | Reason It's Useless |
|---|---|
| Luxurious Lobby Decor | Overly lavish lobby decorations don't necessarily attract more guests and can be a drain on the budget. |
| Premium Mini-Bar Brands | Unless you are a high-end hotel, most guests are satisfied with mid-range options in the mini-bar. |
| Excessive Room Service Menu | A large room service menu increases inventory costs and leads to more food waste. |
| High-End Gym Equipment | Top-of-the-line gym equipment is not always necessary and can be cost-prohibitive. |
| Paper Advertising | Traditional paper ads often have a lower return on investment. Don’t include them in the marketing strategy of your hotel. |
| Multiple Uniform Styles | Having various uniform styles increases costs without adding significant value to the guest experience. |
| Excessive Staff | Overstaffing leads to higher labor costs without necessarily improving service quality. |
| Premium Subscription Services | Expensive subscriptions for music or magazines often go unnoticed by guests. |
| Exclusive Ingredients in Dining | Using rare ingredients can inflate costs and complicate supply chains. |
| Costly Furniture | High-end furniture is not always appreciated by guests and can be a significant expense. |
| Custom Printed Stationery | Personalized stationery is a minor detail that most guests overlook, and it can be expensive. |
| Unnecessary Software | Paying for software with features you don’t use is a waste of resources. |
| Premium Water Brands | Most guests are content with filtered tap water, making expensive bottled water unnecessary. |
| Extra Shuttle Vehicles | Maintaining a larger fleet than needed increases operational costs. |
| Excessive Membership Fees | Paying for multiple industry memberships often yields little benefit. |
| Overly Frequent Renovations | Constantly updating decor and layout can be costly and disrupt operations. |
| Expensive Room Centerpieces | Elaborate room centerpieces are often ignored by guests and add to the cost. |
| High-End Tableware in Dining Areas | Luxury tableware is prone to damage and expensive to replace, often going unnoticed by guests. |
| Excessive Staff Meetings | Too many meetings can reduce productivity and increase labor costs. |
| Expensive Brochure Designs | Frequently redesigning brochures is costly and often unnecessary. |
| Unused Promotional Materials | Ordering more promotional items than needed leads to waste and unnecessary expense. Get our marketing budget planner template. |
| Paid Directory Listings | Many free listing options are available, making paid listings often redundant. |
| High-End Catering Equipment | Specialized catering equipment is often unnecessary and adds to costs without a proportional benefit. |
Stop working with a tight budget for your hotel!
Managing a budget for a hotel when funds are tight can feel like a nightmare. It's like being trapped in a situation where any unexpected expense can overwhelm you.
This constant pressure makes it nearly impossible to invest in growth projects, leaving you always chasing after expenses. It's a life filled with stress and sleepless nights.
Yes, you can continue down this path, scraping together pennies and barely making ends meet. But there's another part of the equation you might be overlooking. Instead of just trying to cut costs, you can focus on growing your revenue. More income means more breathing room and more money to spend.
And no, you don't necessarily have to spend money to grow. There are plenty of zero-cost initiatives and strategies that can help you increase your revenue by 10%, 20%, or more. We've detailed all of these strategies in our guides, after studying dozens of hotels just like yours. Get them now!
Make your hotel more profitable
We have studied the strategies of the best hotels in the world. All their tactics are explained in our pack!
