The money
Revenue is driven by ADR and occupancy, combining as RevPAR, with food, beverage, spa and events adding substantial ancillary revenue. Staff-to-room ratios can be well above one per room, so labour is a major cost line. Management companies typically earn a base fee as a percentage of revenue plus an incentive fee tied to profit. Gross operating profit margins vary widely depending on how much food and beverage the hotel runs. Capital expenditure on refurbishment is enormous and cyclical.
Numbers that matter
- ADR
- average daily rate per occupied room
- Occupancy
- share of rooms sold
- RevPAR
- revenue per available room
- TRevPAR
- total revenue per available room including F&B and spa
- GOPPAR
- gross operating profit per available room
- Guest satisfaction index
- review and survey scores
- Staff-to-room ratio
- service intensity
What keeps owners up
- Recruiting and retaining skilled staff
- Rising guest expectations for personalisation
- Geopolitical shocks hitting international demand
- Refurbishment capital requirements
- Sustainability expectations and energy use
- Pay gaps between guests' world and staff realities
What we talk about
- Concierge craft and the black books of the trade
- Butlers, housekeepers and the invisible service layer
- Brand standards versus genuine hospitality
- Owner, operator, brand: who runs a luxury hotel
- Front-office careers to general manager
- Luxury and sustainability: honest or greenwash
- What staff accommodation tells you about an employer