👉 What it costs to keep the hotel running day to day.
📘 What is OpEx?
OpEx (Operating Expenses) refers to the recurring costs associated with a hotel’s normal operations.
Unlike investment in assets expected to deliver value over several years, OpEx relates to the resources and services required to operate the property on an ongoing basis.
In a hotel, operating expenses may include:
- payroll;
- utilities such as electricity, water and gas;
- housekeeping and laundry;
- routine maintenance;
- amenities and consumables;
- outsourced services;
- software licences and subscriptions;
- certain marketing expenses;
- commissions and other distribution-related costs.
Monitoring OpEx is particularly important because increasing revenue does not automatically mean improving profitability. Hotels also need to understand how much it costs to generate and support that business.
📊 OpEx Formula
Although OpEx is not a KPI with one universal formula, total operating expenditure can broadly be expressed as the sum of the costs required to run the hotel’s normal operations:
OpEx = Payroll + Utilities + Maintenance + Services + Technology + Marketing + Other Operating Expenses
The exact categories will depend on each property’s accounting and operating structure.
✅ Why is OpEx important?
- Shows how much it costs to maintain the hotel’s normal operations.
- Helps identify increases or deviations in specific costs.
- Adds financial context to Revenue Management results.
- Shows whether revenue growth is translating into greater profitability.
- Supports more realistic budgeting and financial forecasting.
- Helps assess the financial impact of commercial and operational decisions.
💡 Practical example of OpEx
A hotel increases its revenue by 10% compared with the same period the previous year.
Over the same period, however, energy costs, distribution commissions and other operating expenses increase significantly.
Even if ADR and RevPAR have improved, higher OpEx may mean that the increase in revenue delivers a smaller improvement in profit than expected.
Looking only at how much the hotel earns therefore tells only part of the story.
🔄 Disambiguation of OpEx
OpEx vs CapEx:
OpEx covers the recurring costs required to operate a hotel. CapEx relates to investment in assets or improvements expected to provide value over several financial periods, such as a major room refurbishment or new infrastructure.
OpEx vs TechEx:
OpEx includes operating expenses across different areas of the business. TechEx focuses specifically on technology expenditure and investment. A SaaS subscription to an RMS, for example, may form part of both the hotel’s TechEx and its OpEx.
OpEx vs Distribution Costs:
Distribution costs, including certain commissions, may form part of operating expenditure, but they represent only one category within it. OpEx provides a much broader view of the costs involved in running the hotel.
OpEx vs GOP:
OpEx represents operating expenses. GOP (Gross Operating Profit) reflects the operating profit remaining after the relevant operating expenses have been deducted from operating revenue.
In summary: OpEx = the recurring expenditure required to keep a hotel operating and delivering its services.
