Alright, let’s talk about money. Specifically, how you’re spending it in your hotel. We’ve covered labor, and that’s a huge chunk, but it’s just one piece of the puzzle. If you’re truly serious about optimizing your profitability, you need to dig deeper. You need to get granular.
Too many hotel managers look at their Profit & Loss (P&L) statement and see big, intimidating numbers. They might nod at the total expenses, maybe wince at a few line items, but they don’t really understand what’s driving those costs on a day-to-day, guest-by-guest basis. This isn’t about just cutting corners; it’s about smart, surgical cost management that improves efficiency without sacrificing guest experience.
The secret weapon here? Cost Per Occupied Room (CPOR), applied not just broadly, but line by line across your P&L. This metric is your flashlight in the dark corners of your expenses, showing you exactly where your money is going for each guest that walks through your doors.
What is CPOR and Why You Need It
Simply put, Cost Per Occupied Room (CPOR) is the total cost of a specific expense category divided by the number of occupied rooms for a given period.
So, if you spent $1,000 on breakfast supplies in a month and had 500 occupied rooms, your CPOR for breakfast is $2.00.
Why is this so powerful? Because it shifts your perspective from abstract totals to concrete, actionable units. Instead of saying, “Our breakfast costs are too high,” you can say, “Our breakfast costs are $2.00 per occupied room. Can we get that down to $1.80 without compromising quality?” This makes the problem tangible and the solution measurable.
CPOR allows you to:
  • Pinpoint Inefficiencies: It immediately highlights categories where your costs are disproportionately high relative to your occupancy.
  • Benchmark Performance: You can compare your CPOR for specific items against industry averages, competitor data (if available), or your own historical performance.
  • Drive Accountability: When you give a department head a CPOR target, you’re giving them a clear, measurable goal that directly impacts profitability.
  • Make Data-Driven Decisions: No more gut feelings. CPOR provides the hard numbers you need to justify changes, negotiate with vendors, and optimize operations.
Tracking CPOR: Get Down to the Nitty-Gritty
To leverage CPOR effectively, you need accurate data. This means breaking down your expenses on your P&L into meaningful categories and then dividing them by your occupied room count.
Here’s how to start tracking it for common hotel expenses:
  1. Categorize Everything: Your accounting software or spreadsheet should allow you to tag expenses by department or specific use. Don’t just lump “supplies” together. Create distinct categories for “Cleaning Supplies,” “Guest Amenities,” “Breakfast Food,” “Maintenance Supplies,” etc. The more granular, the better.
  2. Collect Occupancy Data: This is easy. You already track occupied rooms daily. Just make sure you have a consistent way to aggregate this data for the same period as your expense reports (e.g., weekly, monthly).
  3. Calculate Consistently: For each expense category, divide the total cost by the total occupied rooms for that period.
    • Example for Cleaning Supplies: If your total cleaning supply bill for July was $1,500 and you had 1,000 occupied rooms in July, your CPOR for cleaning supplies is $1.50.
    • Example for Breakfast: If your total breakfast food cost for July was $2,500 and you had 1,000 occupied rooms, your CPOR for breakfast is $2.50.
  4. Trend It: Don’t just look at a single month’s CPOR. Track it over time. Look for spikes, dips, and consistent patterns. Is your CPOR for amenities creeping up? Did your breakfast CPOR drop after you changed suppliers? These trends tell a story.
CPOR for Smarter Budgeting: No More Guesswork
Once you have historical CPOR data, your budgeting process transforms from an educated guess into a strategic exercise.
Instead of simply adding 3% to last year’s total breakfast budget, you can now budget based on projected occupancy and your target CPOR.
  • Example: If your average breakfast CPOR is $2.50, and you project 12,000 occupied rooms next quarter, your breakfast budget should be $30,000 ($2.50 x 12,000).
  • Scenario Planning: What if occupancy drops by 10%? You can immediately adjust your variable CPOR-driven budgets down. What if it increases by 10%? You know exactly how much more you’ll need to spend.
This method forces you to think about your costs in relation to your business volume, making your budgets far more realistic and adaptable.
Actionable Strategies to Reduce Costs (Line by Line)
Now for the fun part: using CPOR to actually reduce expenses.
1. Breakfast CPOR: The Morning Meal Mission
Breakfast is a major draw, but it can also be a major drain if not managed carefully.
  • Portion Control & Waste Reduction: Train staff on proper portion sizes. Use smaller serving utensils. Implement a “first-in, first-out” system for perishables. Track waste daily – what’s left over? Why? Can you adjust ordering or preparation?
  • Supplier Negotiation: Don’t just stick with the first vendor. Get multiple quotes for your most consumed items (coffee, bread, eggs). Can you buy in bulk for non-perishables?
  • Menu Optimization: Is every item equally popular? Can you rotate some less popular, high-cost items out, or replace them with more cost-effective alternatives that guests still enjoy?
  • Guest Feedback Loop: Are guests consistently leaving certain items untouched? That’s money in the trash. Adjust your offerings based on what guests actually consume.
2. Amenities CPOR: The Little Luxuries
Those small bottles and soaps add up fast.
  • Bulk Purchasing & Dispenser Systems: The biggest win here. Switch from individual bottles to wall-mounted dispensers for shampoo, conditioner, and body wash. The initial investment pays for itself quickly, reduces waste, and is better for the environment.
  • Strategic Placement: Do you need every single amenity in every room? Maybe a higher-end suite gets a few extras, while standard rooms stick to the essentials.
  • Guest Choice/Request: Consider offering certain less-used amenities (e.g., sewing kits, shower caps) only upon request at the front desk. This reduces waste from unused items.
  • Negotiate with Suppliers: Just like breakfast, get competitive bids for your amenity suppliers.
3. Cleaning Supplies CPOR: The Invisible Expense
Cleaning supplies are essential, but their costs can balloon if not managed.
  • Concentrates are Your Friend: Buy concentrated cleaning solutions and ensure staff are properly diluting them. This is a massive cost-saver compared to pre-mixed solutions.
  • Proper Usage Training: Train your housekeeping staff on the correct amount of product to use. More isn’t always better, and often just wastes product.
  • Inventory Management: Don’t let supplies sit and expire. Implement a strict inventory system. Order only what you need, when you need it. Prevent hoarding in closets.
  • Durable Tools: Invest in high-quality, durable cleaning tools (mops, buckets, vacuums) that last longer, reducing replacement costs.
4. Labor CPOR: The Human Element (Revisited)
While we covered EFTEs, CPOR adds another layer. Your Labor CPOR is your total labor cost divided by occupied rooms.
  • Smart Scheduling: Use your MPOR data to create precise housekeeping schedules. For front desk, use historical check-in/check-out patterns to ensure you have enough staff during peak times and can reduce staff during lulls.
  • Cross-Training: As discussed, cross-training staff (especially fixed labor) means you get more bang for your buck. A front desk agent who can also help with light administrative tasks when it’s slow is a valuable asset.
  • Performance-Based Incentives: If you have staff who consistently achieve lower MPORs or higher guest satisfaction scores (leading to fewer re-cleans), reward them. Efficient staff directly reduce your labor CPOR.
You’re in charge of your hotel’s financial destiny. By breaking down your costs with CPOR, you gain incredible clarity and control. It’s not about being cheap; it’s about being smart. Implement these strategies, track your numbers, and watch your profitability improve.