Analyzing Fixed and Variable costs in a Hotel industry.

VARIABLE COSTS :

Items used in a room (soaps, .)

Electricity units used

Salary of housekeeping staff (adhoc )

Laundry cost per pair

Cost of food served

FIXED COSTS:

Salary of permanent employees

Hotel building and maintenance cost

Depreciation of ACs, Vacuum Cleaners and other equipments

Strategy

1)

Hotel is of 100 Rooms capacity and 65 rooms are occupied. If one person in housekeeping dept. can
clean 10 rooms. We need 7 people for cleaning 65 rooms. If 5 more guests come, the housekeeping
people needed are still 7. In this case, if benefits the hotel to add 5 more guests even at a lower rate.
The hotel can offer discounts to those 5 guests, hence increasing profits.

2)

A smaller hotel may pay for laundry at a rate per pair to a ‘dhobi’. If the no. of guests keep on
increasing, the hotel should buy washing machines . This will increase the fixed cost but will be more cost
efficient than hiring a ‘dhobi’.