hotel payroll

Most hotels measure payroll as a percentage of revenue or, as it is commonly referred to, labor cost percentage. This is not helpful. Why, you ask? Well, first of all, if sales magically increase because of an increase in the average room rate or average cover, your labor cost will automatically improve.…

When it comes to payroll we are not just paying the cash wages. We have additional dollars that are substantial in the form of supplemental costs and employee benefits.

So, what we want to have are three areas we can see and analyze in our financial statements:

1. Cash wages
2. Auxiliary wage costs – “supplemental”
3. Employee benefits

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In hospitality, we all know that payroll is by far the largest expense and therefore it has the biggest negative impact on profitability. Turn this around and know that finding ways to be more efficient with payroll can have a big impact on labor costs and a positive impact on your…