Costs

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All results

The annual results of your hotel are stated in the operating review, will be created automatically by the accountant at the end of each year. You just have to analyse the results, you do not have to calculate them yourselves. Of course, when making decisions and incurring costs, you will make some assumptions and calculations predicting occupancy and profit. After each year ends, they will be ready for you via your secret Team File link.

The operating review consist of a number of crucial elements, which each have their own page:

• The overview of the Operating review
• The Revenues
• The Costs
• The Net profit
• The Key metrics

All costs

The situation below is just an example of the cost projections for the coming four years. Again, the situation when you take over is the Year 1: You cannot influence the costs and prices of Year 1.

Team File tab Results. Costs overview during the starting Year 1 and example of the next four consecutive years of Hotel The Green Oasis.
We will focus on year 1 now.

Cost structure

Below you'll find an overview which gives further insights into the cost structure as far as information is available in the Bergman's administration. This reflects the situation as you take over, and will be your starting position. Note that the cost of Management Team Decisions are missing in the relevant Year 1. The four years in the example give an impression how these decisions could influence the operating review. For now, in Year 1, as you take over, the costs: Management Team Decisions are all zero. These decisions are, what has been lacking the last few years: You cannot do without any longer.
Let's pretend the occupnacy rate in Year 1 stays at 50% (as it was befofe), the total of the cost structure would look like this:

Cost structure
Costs in year 1	Source	Amount	Perc.	Sub total
Costs: fixed	Depreciation costs of existing assets	€ 525,187	34.64%
	Fixed staff costs	€ 550,271	36.29%
	Costs of premises	€ 390,473	25.75%
	Insurance & interest costs	€ 50,012	03.29%
Total fixed costs		€ 1,515,943	100%	62,36%
Costs: variable	Variable staff costs	€ 355,170	38.95%
	Laundry costs	€ 118,390	12.94%
	Cleaning costs	€ 236,780	25.88%
	F&B purchase costs	€ 204,312	22.33%
Total variable costs		€ 914,652	100%	37.63%
Costs Management Team Decisions	Marketing costs	€ 0	00.00%
	Staff development costs	€ 0	00.00%
	Extra depreciation costs	€ 0	00.00%
	Market research costs	€ 0	00.00%
	Other costs	€ 0	00.00%
Total Costs Management Team Decisions		€ 0	100%	00.00%
Total all costs		€ 2,430,595		100%

More info on costs

• the fixed costs have stayed the same during all four years; the fixed depreciation costs are one of them. You can not influence them and they are calculated automatically. The logic is also explained in your Team File when you do a mouse-over of the cost group.
• the variable costs depend on the occupancy rate; for example laundry; the more rooms occupied the more laundry there is. They are automatically influenced by the occupancy rate and calculated automatically. The logic is also explained in your Team File when you do a mouse-over of the cost group.
• the Costs Management Team Decisions, will depend from Year 2 on, depending on the Year 2-3-4-5 decisions made by you as the new Management Team. Therefor they now are indicated green. So, this is totally up to your Team, within boundaries to prevent you from doing very illogical things.

More numbers

Check basic set-up of costs groups in hotels to have some reference on the numbers.
Of course, any situation is different, any time frame (think of the Covid period), the ownership, the state (quality) of the premises etc. The file, though, might give some ideas from a calculation perspective.

Past

When your assignment is managing one of the new establishments, these will be the benchmarks you start with, and you refer to. So, you will start your new strategic plans, as a point of reference, with all the same set-up of costs and decisions as in the past. At the time you take your own decisions, you can roll out your new ideas, and concepts in full.

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. . . Emerald Forest Hotel offer an emerald hotel experience! Run your own hotel in this management simulation . . .