Operating Costs
What is the meaning / definition of Operating Costs in the hospitality industry?
Operating Costs, also known as Cost of Goods Sold (COGS), is a cost which is directly related to everything needed to keep a business up and running.
Examples for Operating Costs include items such as payroll, rent, office supplies, utilities, marketing, insurance, accounting, legal fees and taxes. Calculating Operating Costs requires only that you add up the expenses that make up your annual fixed costs and your variable costs. To reduce Operating Costs many businesses increase their outsourced staff or become more eco-friendly (lower electricity bills, no paper, etc.).
Formula:
Operating Costs = Costs of Goods Sold + Operating Expenses
See Also:
- COGS – Cost of Goods Sold
- Fixed Costs
- Variable Costs
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About the Author:
As CEO and Founder of XOTELS, Patrick Landman has made it his mission to turn hotels and resorts into local market leaders. XOTELS´ diverse expertise and deep-knowledge across revenue management consulting, hotel management, and hotel consulting, enables us to drive results for independent boutique hotels, luxury resorts, and innovative lodging concepts. Below you will find opinion articles written by Patrick Landman.
