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.
Heads on Beds
Heads on beds is a fundamental tenet of the hotel industry. This follows the economic principle of low variable costs and high fixed costs therefore any additional guests adds significantly to the cash pool to offset the high fixed costs. In effect, the contribution margin per hotel guest is extremely lucrative.