Heads on Beds – Hotel Management

The hotel business has one tenet that stands above all other hospitality based business standards. Get heads on beds. Why does this one business standard have so much more value than any other? Well, it is simple, the fixed cost of operations for hotels are over 70% of all costs. Therefore any additional guest sleeping in one of the rooms adds significantly to the potential profit of the hotel. This article is designed to illustrate the math behind this concept of heads on beds. 

The first important element of this principle is understanding fixed and variable costs of hotel operations. Then, the business principle of marginal value of one additional guest at the hotel is explained. Finally, a simple aggregated formula is illustrated so any hotel operator can easily understand the value of getting heads on beds. 

Fixed and Variable Costs in the Hotel Business 

If you imagine the hotel operation you can visualize the respective costs they incur. The most obvious is of course the structure itself. Then there are

© 2014 – 2022, David J Hoare MSA. All rights reserved.