The 5 most costly oversights in hotel costing

Full houses, good reviews, rising revenue. And yet, at the end of the month, there’s less left over than expected. This pattern is more common in the hotel industry than you might think. Most of the time, it’s not due to occupancy rates - but rather to what goes on behind the scenes.

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Hotels have a wealth of data. What they often lack is an overview of their financial situation.

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PMS, POS, payroll, energy providers, tax advisors - the information is there. But it’s scattered, arrives late, and is difficult to correlate. The result: decisions are made based on gut instinct. And you can’t control costs you can’t see.

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Our work with over 150 hotels in the DACH region consistently reveals the same pattern: it is not major crises that put hotels under financial pressure. Rather, it is five structural blind spots - most of which can be resolved once they are identified.

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Blind Spot 1: Revenue is up - but profits are still missing

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“Revenue is like snow - it covers everything.” This quote comes from Till Schäfer, Managing Director of Finance at Falkensteiner Hotels & Residences. It sums up what many hoteliers realize too late.

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A strong year in terms of revenue can completely mask a creeping rise in costs. As long as occupancy is high and revenue is coming in, it goes unnoticed that the cost of goods sold, energy costs, or service provider contracts have long since spiraled out of control. It’s only when the snow melts - that is, when the season ends or occupancy rates drop - that the underlying issues become apparent.

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What this means in practice: A hotel with approximately 100 rooms and annual revenue of 11 million saw a 15% increase in revenue over two consecutive years, yet its gross operating profit still fell by about 10% in the second year - because rising labor costs and unaccounted-for fixed costs were never identified. The tax advisor did not provide the figures until the end of the fiscal year. Too late for operational adjustments.

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What helps: Don’t focus on revenue - focus on contribution margin. And don’t do this monthly after the fact, but on an ongoing basis.

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Blind Spot 2: Personnel costs are planned - but not managed

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Labor costs are typically the largest expense category for a hotel. In the Austrian vacation hotel industry, the median labor cost ratio is around 35–38% of operating revenue - depending on the size and category of the establishment. Nevertheless, in many establishments, staffing is still largely based on intuition: past experience, seasonal patterns, and the core team.

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The problem isn't the planning - it's the lack of alignment between the forecast and actual staffing. If it becomes clear that a week will be slower than expected but the schedules have already been set, unnecessary costs are incurred. Conversely, if a busy week is coming up and the team is understaffed, service quality suffers.

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What this means in practice: At a 40-room hotel in South Tyrol, staff costs were reduced by 10% through the use of profitize - while maintaining the same level of service quality. The key was not staff cuts, but more precise management: Forecast data was linked to actual working hours, revealing discrepancies - just in time to take corrective action.

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What helps: Forecasting and staffing must be integrated. If they operate in separate systems, there is no basis for making decisions.

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Blind Spot 3: Fixed Costs That Just Keep Coming In

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Internet service provider. Cash register maintenance. Payroll software. Energy supply contract. These costs appear on the expense side every month - and are rarely questioned. Not out of indifference, but because there isn’t enough time in day-to-day operations.

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The result: Many hotels pay the same price year after year, plus an adjustment for inflation, without checking whether the price is in line with market rates, whether the contract could be negotiated more favorably, or whether the service is even still being used.

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What this means in practice: Many hoteliers know that their fixed costs are “somehow” okay - but they don’t know if that’s actually true. Without an external benchmark, there’s no way to tell. An internet contract that’s been running unchanged for three years doesn’t stand out. Neither does a cleaning service provider whose rates are adjusted annually for inflation. Only when you compare similar businesses side by side do discrepancies become visible - and with them, the potential that quietly goes unrealized every month.

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What helps: Fixed costs require the same critical scrutiny as variable costs. And a benchmark - because without an external benchmark, you won’t know whether you’re on track or not.

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Blind Spot 4: Too Much Data – Not Enough Clarity

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Many hotels have more data than ever before. PMS, POS, accounting systems, HR software, energy meters. The problem isn’t a lack of data - it’s data fragmentation. Each system provides its own version of the truth, in its own format, at its own time.

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Those who have fully outsourced their accounting to a tax advisor often receive financial data that is detailed enough to meet legal requirements - but not for operational management. Cost centers are missing. The level of detail in the entries is insufficient. There is no way to distinguish an outlier in the beverage cost calculation from one in the cleaning supplies cost calculation.

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The result: You sense that something isn't right. But you can't pinpoint exactly what it is. And because there's no clarity, you don't make a decision - or you make the wrong one.

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What this means in practice: A 60-room facility was using seven different systems whose data were not linked. Data had to be manually consolidated for monthly reports - a process that took about 20 hours per month. After consolidating the data in profitize, cost items that had been buried in the noise for years became visible for the first time - including above-average costs for cleaning supplies and software, some of which had been carried over for years without being questioned.

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What helps: Data doesn't have to be more - it has to be connected. A comprehensive picture isn't created by more reports, but by a shared data logic.

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Blind Spot 5: Flying Blind Financially During the Year

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In many hotels, the monthly financial statements for January aren’t available until mid-February. Sometimes not until March. The figures are accurate, but they’re outdated. What went wrong in January can’t be corrected in March.

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This structural time issue particularly affects companies that outsource their accounting. The tax advisor delivers what was agreed upon, but not with the speed required for operational management. The result is not a classic lack of information, but rather flying blind throughout the year: you navigate the year without knowing where you currently stand.

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What this means in practice: A hotel typically receives its monthly financial statement an average of 20 days after the end of the month. As a result, cost fluctuations - such as unusually high costs of goods sold or increased energy costs - are not identified until at least three weeks later. During this time, the anomaly simply continues. Extrapolated over a fiscal year, this results in a missed optimization opportunity of approximately €200,000 - not due to a single wrong decision, but because deviations that could have been corrected were identified too late.

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What helps: Near-real-time transparency is not a luxury. It is essential for decisions to still have an impact.

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Self-assessment: How many blind spots does your business have?

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Five questions. Honest answers are enough.

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1. Do you know in real time how your last month closed out?
2. Are your labor costs aligned with your current schedule?
3. When was the last time you actively reviewed your fixed cost items?
4. Do you have a benchmark for your key cost items?
5. Can you view your PMS, POS, and accounting data all in one place?

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Anyone who answers “no” to three or more questions needs to take structural action - regardless of how high current capacity utilization is.

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What's next?

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This guide provides an overview. What it doesn’t do: analyze your specific business.

profitize offers hoteliers a free demo where we work together to identify areas in your business where transparency is lacking and determine the specific costs involved.

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profitize is an AI-powered financial planning and analysis platform for hotels. More than 150 properties in over 5 countries use profitize to control costs and optimize revenue.