Costs
All results
The annual results (operating review) of your hotel, 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 results presented there will be divided into three parts:
- Section Operating review, found on the operating review page with all your revenues and costs resulting in your net profit (or loss). We'll dive into this now.
- Your personal key metrics.
- Market research, if your team decides to pay for this in advance.
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 0: You cannot influence the costs and prices of year 0.
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 0. The four years in the example give an impression how these decisions could influence the operating review. For now, in year 0, 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.
| Cost structure | ||||
|---|---|---|---|---|
| Costs in year 0 | 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 on the Year 1-2-3-4 decisions made by the new Management Team. 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 in your new venue, 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.
