Every owner who has looked at a bad month has had the same thought: where is it all going? The honest answer, in most small hotels, is that it is going out through four or five lines that have never been examined properly — not because anyone is careless, but because running the place takes all the hours there are.

This is the order I work through them in, and roughly what each one tends to be hiding.

1. Payroll — the rota is the cost, not the wage rate

Payroll is almost always the largest line, and the instinct is to look at pay rates. That is the wrong end. The cost is in the rota: how many hours are scheduled, on which days, against what the hotel is actually doing.

Most rotas in small hotels were built once, for the busiest plausible day, and then run every day. Reception is covered from seven until eleven whether there are four arrivals or forty. Breakfast is staffed for a full house in the middle of February. Nobody decided this; it accumulated.

• Put scheduled hours next to arrivals, departures and occupancy, day by day, for a normal month.
• Look at where the hours sit rather than how many there are — the waste is usually in the shoulders of the shift, not the middle.
• Count hours, not people. A rota that looks lean in headcount can be expensive in hours.
• Check what overtime is routine. Routine overtime is a rota problem wearing a disguise.

None of that requires paying anyone less. Done properly it usually means fewer, better-used hours and a team that is not stretched thin at the times that matter.

2. Housekeeping — the biggest controllable cost, the least measured

Housekeeping is normally the largest cost an owner can genuinely control, and in most small hotels nobody can tell you what a clean room costs. That single number — cost per occupied room — changes the conversation, because it turns a vague sense that cleaning is expensive into something you can compare week to week.

• Time the rooms. Not to push people, but because a departure and a stayover are different jobs and paying the same for both hides the truth.
• Allocate by room type and floor rather than by number of rooms. Equal room counts are not equal work.
• Track the rooms that get re-cleaned or complained about. Re-cleaning is paid for twice.
• Look at linen and consumables separately. They drift, and they drift quietly.

3. Food and beverage — margin, not revenue

F&B is judged on turnover far too often. Turnover is not the point; the margin on it is. Breakfast is the clearest example: a cost per cover that nobody has calculated, portioning that varies with whoever is on, and waste that never appears anywhere.

Supplier pricing deserves its own look. Prices agreed when you opened an account rarely stay where they were, and the drift is small enough each time that nobody queries it. Pull twelve months of invoices for your five biggest suppliers and compare the first month with the last.

4. Contracts and utilities — the renewals nobody watches

This is the least interesting line and often the fastest win, because it needs no operational change at all. Every hotel accumulates contracts that renew on autopilot: energy, laundry, waste, maintenance, pest control, card processing, software subscriptions for things you stopped using two years ago.

• List every recurring payment with its renewal date and its notice period. Most owners have never had this on one page.
• Check whether anything has rolled onto an out-of-contract rate. It happens more than you would think.
• Look at standing charges separately from unit rates, because they are negotiated separately.
• Cancel what you are not using. There is usually something.

5. Commission — a cost that grows with your best months

OTA commission is charged as a share of room revenue, which makes it the one cost line that grows exactly in step with a good month. It belongs in this list even though it sits somewhere else in the accounts.

The work is not “get off the OTAs” — for most independent hotels that is neither realistic nor desirable. It is knowing what each channel actually costs you, which ones bring business you would not otherwise have had, and where direct booking can take a share without a marketing budget you do not have. That is a revenue management question as much as a cost one.

What not to cut

Some savings cost more than they save, and they all look the same on a spreadsheet:

• Cleanliness. It is the first thing in the reviews and the hardest thing to get back.
• Breakfast quality. Cheap to degrade, expensive in ratings.
• Maintenance. Deferred maintenance is not a saving; it is borrowing, at a poor rate, against a capital bill.
• The people who hold the operation together. Every hotel has two or three. Losing one costs a season.

What this looks like when it works

An 18-bedroom hotel in Edinburgh city centre was rebuilt around a lean, technology-led operating model. Wage costs came down 70% and revenue grew 30% — the two together, which is the point: the cost work and the revenue work were the same project. Read the case study →

Three things worth doing this week

• Pull the last twelve months of P&L by department. Not the summary. The departmental detail is where the answers are.
• Put scheduled hours against occupancy for one normal month and look at the shape.
• Write down every contract you pay monthly, with its renewal date.

None of those take long, and between them they usually locate most of the problem. What you do next is a bigger conversation.

Related: Hotel turnaround & repositioning · All hotel advisory services · More insights