As any other professional organisation

April 20, 2019 Management

As any other professional organisation, hotels have as main objective achieving a certain level of profitability or return on investment and the break-even analysis enables hotel managers to establish how much of any product (Guestrooms, Food & Beverage items, etc.) or service (laundry services, concierge service, etc.) must be sold in order to realise a profit (exact point above which they need to operate to ensure a profit).
Furthermore, the break-even analysis assists hotel management with the pricing of their products, services, menu prices and room rates, again keeping in mind the achievement of profit.
In conclusion, managers must understand that the break-even point has a strong influence in the economical feasibility of a project. Having a low break-even point makes the selling of a service/product a more economically doable project. Lowering the break-even point is possible by raising prices or cutting costs (both fixed and variable).

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