ECONOMICS: List of costs

Sources used to develop cost list

All costs, financial projections and assumptions in this section are based on the 2014 HOST Almanac (Smith Travel Research [STR], 2014).  The HOST report is prepared by Smith Travel Research, the leading data analytics firm for the lodging industry.  The report is the standard benchmark report for lodging analytics.  Projections are also based on the 2013/14 HVS Hotel Development Cost Survey (Hospitality Valuation Service [HVS], 2014) and the Hotel Cost Estimating Guide 2014 (Hospitality Valuation Services (HVS) [HVS], 2014).   HVS tracks and analyze hotel development costs for all types of hotel. 

Fixed and Variable Costs

The majority of costs in the lodging industry can be classified as mixed, and have both fixed and variable components.  Table 1 below provides a summary of these costs relevant to the proposed hotel and the percentage that are fixed, according to industry standards.   

Table 1:  Fixed and Variable Costs

Expenses	Percentage of expenses fixed
Rooms	60.0%
Administrative & General	70.0%
Information Systems	90.0%
Security	80.0%
Marketing	70.0%
Property Operations & Maintenance	70.0%
Energy Costs	90.0%
Property Tax	100.0%
Insurance	100.0%

Start Up Costs

Projected start-up costs are highlighted below in table 2.   

Table 2:  Projected startup costs

Capital Expenditures	Soft goods guestrooms
	Soft goods guest bathrooms
	Corridors
	Lobby softgoods
	Public softgoods
	Bar/Lounge
	Meeting rooms
	Fitness room
Operating Expenses	Salaries
	Office Equipment
	Information System
	Licenses fees
	Insurance
	Marketing & Advertising
	Operating Supplies
	Energy Expenses
	Administrative & General
	Security
	Property Operation & Maintenance