Everyone knows that labor is the biggest cost for hotels, comprising roughly 50 percent of all operating expenses. Further, the current tight labor market, combined with recent wage-related legislation, is putting upward pressure on salaries, wages, and benefits.What often gets overlooked is the other 50 percent of expenses. Some operating costs have been rising at a greater pace than labor. Conversely, hotels have benefited from a decline in certain expenses that has helped to boost the bottom-line.The following statements highlight hotel expenses beyond labor observed during 2018 that owners and operators should keep an eye on. The data represents the aggregate performance of the 7,000+ U.S. hotels that voluntarily submitted data to CBRE Hotel Research's annual Trends® in the Hotel Industry survey:

  • ​Within the rooms department, commissions increased by 0.4 percent. Are you controlling your distribution channels to minimize payments made to intermediaries?
  • Credit card commission payments increased by 1.8 percent, while total revenue grew by 2.6 percent. Are you able to keep credit card related fees from rising at the pace of revenue?
  • Conversely, franchise (3.1%) and management fees (2.8%) are rising at a pace greater that revenues. Are you monitoring the myriad of fees being charged by your franchise and management companies?
  • After three years of declining utility costs, these expenses have risen 1.4 percent each of the past two years. How effective are your green and sustainable practices?
  • Property taxes and insurance averaged 3.6 and 0.8 percent of total operating revenue respectively during 2018. Do you need to contest your property assessment, or review your insurance contract?

CBRE's annual Trends® in the Hotel Industry survey tracks over 250 unique revenue and expense items. Using CBRE's online BenchmarkerSM service owners and operators can compare the efficiency of the operations at their hotels against the aggregate performance of comparable properties selected on a custom basis.​

Source: CBRESource: CBRE
Source: CBRE
Source: CBRESource: CBRE
Source: CBRE
Source: CBRESource: CBRE
Source: CBRE

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world's largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.