Cost price

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Cost price per room

Data on the occupancy rate of the rooms, as well as the variable and fixed costs per room are available on the history. So you could calculate the cost price per room (type) and per season. So, by doing so you also know what the minimum price has to be, to cover these costs.
In hotel industry a famous ratio to work with would be the Revenu per available room.

Example of cost price per room

So, to an indication of the average cost price per occupied room would be:
€ 107.10 (check Revenue per room) - profit of € 23.97 = € 83.13 this gives an indication of average costs per occupied room on the moment you take over.
Though, you will make additional costs. Let's say in a total of € 400,000 (in your Decisions) and, let's pretend you have the same occupancy rate, your average cost price per occupied room will go up with € 400,000 ./. 18,200 = € 21.97 indication additional average costs. So the average cost price now would be € 21.97 + € 83.13 = € 105.10 per occupied room. Just to 'compensate' for these additional costs, and keep all the rest the same, and let's pretend the same occupancy rate, your sales prices must (on an average) go up with € 21.97 in this example.
The average cost price gives you a basis on which to decide what Sales price to sell for.

Sales price

If you make more costs, see the calculation above, you nee to 'cover for that' by:

• higher sales prices
• or more sales, so a higher occupancy rate
• or less costs on other cost types, which is hardly impossible to realise.

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