Improving hotel profitability starts on the floor
Operating performance
A hotel can achieve higher occupancy and revenue while its operating result falls short. Additional staffing hours, rework, waste and poorly coordinated processes can absorb the benefits of growth.
Improving hotel profitability therefore starts with a combined view of revenue, quality and operating capacity. The question is which revenue the hotel can serve at a healthy margin while delivering a reliable guest experience.
At a glance
- Connect forecasting with operating decisions.
- Make GMs accountable for revenue and costs.
- Share knowledge and experience across hotels.
Look beyond occupancy
Occupancy shows how many rooms have been sold. It does not reveal acquisition costs, the workload associated with different stays or guests’ additional spending.
Compare revenue and costs by segment, length of stay and daily demand pattern. Numerous short stays, for example, can create a different housekeeping workload from the same occupancy achieved through longer stays. Incorporate that information into forecasting and staffing.
Plan around actual demand
A roster based mainly on historical habits can create excess capacity and pressure at the same time. Consider arrivals, departures, expected breakfast covers, groups and events. Connect this demand to the skills required on each shift.
Review the coming week with Rooms, F&B and the commercial lead. A new group booking can then translate directly into capacity, purchasing and preparation.
Remove rework before reducing service
Rooms that are not ready on time, missing reservation information and invoices requiring correction create work without adding guest value. Identify where these errors originate and which department can address the cause.
Clearer responsibilities or better handovers may be more useful than a general reduction in hours. Cost reductions that increase waiting times, complaints or employee absence need a full assessment of their consequences.
Make the financial implications visible
Use a focused scorecard: operating profit under a consistent definition, staffing hours per relevant unit of activity, overtime, waste and guest complaints. Compare equivalent periods and account for differences in service concept and demand.
An illustrative calculation: avoiding ten hours of rework each week at an assumed fully loaded hourly cost of €30 releases €300 worth of capacity. It becomes a cash saving only if paid staffing costs actually decrease; otherwise, it creates capacity for better service or other work.
From my own practice
shared accountability at Sircle Collection
At Sircle Collection, I led a team of general managers across several countries. A central principle was that each GM should take active responsibility for the hotel’s overall performance. Revenue prepared the room revenue forecast; my operational leads and GMs were expected to forecast F&B revenue and total hotel costs actively.
This turned forecasting into a management conversation. What do we expect, what supports that expectation and what adjustment does the operation need? A forecast should help managers act ahead of events rather than merely explain a variance afterwards.
Weekly team meetings gave the GMs an opportunity to share knowledge and experience. A solution in one country could help a colleague elsewhere, provided the local concept and market were considered. In my experience, that combination of active forecasting, shared insight and learning from one another contributed to very strong financial results. Financial accountability becomes stronger when managers understand their own hotel and can draw on the experience of the wider team.
Start with one process
Within two weeks, the operations lead should analyse one bottleneck with Finance and the relevant department manager. Trial an adjustment for four weeks. Assess hours, errors and guest feedback together before extending the approach.
Healthy profitability develops when the operation loses less energy and responds more effectively to demand.
