When you’re running a hotel, it’s easy to get lost in the day-to-day grind. You’re putting out fires, handling guest complaints, and making sure everything runs smoothly. But if you’re not keeping a sharp eye on your labor costs, you’re missing the single biggest opportunity to improve your bottom line.
Forget vague concepts. What you need are metrics that matter. A real framework to understand where every dollar is going and, more importantly, how to get a better return on it. I’ve seen too many managers manage with their gut, only to be surprised by an overrun budget. Don’t be that person. You can get a handle on this, and it’s probably a lot simpler than you think.
Let’s break down the key metrics you need to be tracking, what they mean, and how to use them to make smarter business decisions.
EFTEs: A Clearer Picture Than Just Headcount
You might be tempted to just look at your total number of employees, but that can be misleading. A more accurate metric is Equivalent Full-Time Employees (EFTEs).
An EFTE converts all of your part-time and seasonal staff into a full-time equivalent. A full-time employee works 40 hours a week. A part-time employee working 20 hours a week is 0.5 EFTE. A seasonal employee working 10 hours a week for a quarter is 0.25 EFTE. This metric gives you a single, consistent number to measure your staffing levels and costs over time.
How to Use It:
  • Standardize Your Reporting: When you’re comparing your labor costs from this quarter to last quarter, or even to the same period a year ago, using EFTEs gives you an apples-to-apples comparison. It smooths out the fluctuations caused by hiring and letting go of part-time staff.
  • Budgeting and Forecasting: By tracking your EFTEs alongside your occupancy rates, you can start to build a model for future staffing needs. For example, if you know that for every 10% increase in occupancy, you need to add 1.5 EFTEs in housekeeping, you have a powerful tool for forecasting and budget planning.
  • Benchmarking: When you talk to other hotel managers or look at industry reports, EFTEs give you a common language. Instead of saying “I have 50 employees,” you can say “We operate with 35 EFTEs,” which is a far more precise figure.
Minutes Per Occupied Room: The Housekeeping Litmus Test
When it comes to housekeeping, the single most valuable metric is Minutes Per Occupied Room (MPOR). It’s exactly what it sounds like: the total minutes spent cleaning rooms divided by the number of occupied rooms.
This metric is your direct line to understanding your housekeeping efficiency. A low MPOR indicates high efficiency, while a high MPOR could signal a problem. But it’s not just about a single number; it’s about the trends.
How to Use It:
  • Identify Inefficiencies: If your MPOR suddenly spikes, you need to ask why. Is a new staff member struggling? Are there new cleaning standards that are adding time? Is the housekeeping cart poorly organized? MPOR gives you the data point you need to start asking the right questions and finding the root cause.
  • Set Realistic Goals: Once you have a baseline MPOR, you can work with your housekeeping manager to set a reasonable target. You can’t just tell them to “clean faster.” You can say, “Our goal is to reduce our MPOR by 5% over the next quarter.” This gives them a clear, measurable objective.
  • Staffing Decisions: If you know that cleaning a room takes an average of 30 minutes (0.5 hours), and you’re projecting 100 occupied rooms for the day, you know you need 50 hours of housekeeping labor. This allows you to schedule your team with precision, avoiding both under- and over-staffing.
Fixed vs. Variable Labor: The Two-Sided Coin of Your Payroll
Not all labor is created equal. Your payroll can be broken down into two main buckets: fixed labor and variable labor.
  • Fixed Labor includes the employees you need regardless of how many guests you have. This is your general manager, your front desk staff (at least a baseline), your head of maintenance, and so on. Their salaries are consistent and don’t fluctuate with occupancy.
  • Variable Labor is the staff you schedule based on demand. This is your housekeeping team, your restaurant servers, your bellhops, and anyone else whose hours flex with the number of guests.
Understanding this distinction is critical for strategic planning.
How to Use It:
  • Strategic Staffing: Your goal should be to maximize your fixed labor’s productivity and optimize your variable labor. For your front desk, can you have one person cover the quiet morning hours and two for the busy check-in period? For housekeeping, can you have a core team for a baseline number of rooms and use a pool of on-call or part-time staff for peak occupancy?
  • Cost Control: In times of low occupancy, your fixed labor costs will feel high because you’re paying them a salary even when they’re not fully utilized. This is where you can look for cross-training opportunities. Can your front desk staff handle some marketing or administrative tasks during slow periods? In contrast, your variable labor is your key to immediate cost savings during a downturn. When demand drops, you can immediately reduce hours.
  • Budgeting: Separating these two types of costs in your budget gives you a more realistic view of your expenses. Your fixed costs are a baseline, while your variable costs are what you need to adjust and manage based on occupancy and seasonality.
Clear, Actionable Takeaways for the Reader
So, what should you do with all this? Don’t just file this information away. Use it.
  1. Start Tracking Today: If you’re not already tracking these metrics, start now. Implement a system to calculate EFTEs, MPOR, and to categorize your payroll into fixed and variable labor. It doesn’t have to be a fancy software package; a simple spreadsheet is a great starting point.
  2. Benchmark Yourself: Once you have 3-6 months of data, start using it to benchmark your performance. Are your costs going up or down? Are you becoming more or less efficient? This is the foundation of data-driven management.
  3. Cross-Train Your Fixed Staff: To get more value out of your fixed labor, identify opportunities for cross-training. A front desk agent who can also handle basic marketing emails or a maintenance person who can help with minor landscaping tasks gives you more flexibility and value for your fixed costs.
  4. Incentivize Productivity: Create clear goals for your teams. For housekeeping, it could be a target MPOR. For your front desk, it might be a positive review metric. When you tie these goals to rewards, you give your team a reason to care about the numbers as much as you do.
  5. Talk to Your Team: Share these metrics with your managers and team leads. Explain what they mean and why they’re important. When people understand the game, they’re more likely to play it well. This isn’t about micromanaging; it’s about empowerment.
You’re running a business, and that means you need to be a strategist, not just a firefighter. By focusing on these core metrics, you’ll gain the clarity and control you need to not only survive but thrive. Best of luck!