Information and telecommunications costs | By Robert Mandelbaum

Just as technology has become more pervasive throughout our lives, it is now impacting customer service and hotel operations across all departments of a hotel. To provide greater exposure to the rising costs associated with hotel information and technology systems, the 11th edition of the Uniform System of Accounting for the Accommodation Industry added a discrete non-distributed department to capture these expenses. Before the 11th edition, the costs of telephone and Internet services, the payroll of telephone operators and computer technicians and expenses related to information systems were distributed among several departments in the income statement.

Expenditures within the Information and Telecommunications (IT) Systems Directorate are divided into four main categories:

  • Labor costs and related expenses
    Salaries, wages and benefits of telephone operators, information systems managers and systems analysts and programmers.
  • Cost of services
    The cost of telephone, Internet, cellular and fax services for administrative purposes or when provided free of charge to customers. When hotel guests are billed for these services, the revenue and cost of sale are recorded in other operating departments.
  • System expenses
    Software licenses, maintenance, service, storage, and software fees associated with computer systems used in operated and non-distributed departments.
  • Other expenses
    All other IT department expenses such as operating supplies, training, system storage and optimization, uniforms, and travel.

Not included in the IT department are capital expenditures for major software and hardware installations.

To better understand property-level technology spending in U.S. hotels since 2015, CBRE analyzed IT service costs for 2,600 properties that participate in our annual report. Trends® in the hospitality industry investigation and report. In 2021, these 2,600 hotels averaged 207 rooms and achieved an occupancy rate of 54.6% as well as an average daily rate (ADR) of $151.74. It should be noted that there was a lag in adoption of the new IT service, so we only analyzed performance data from properties that submitted IT service cost data each year from 2015 to 2021.

Not a major expense

IT department spending averaged $766 per available room in 2021 across the 2,600 hotels surveyed. This represents only 1.9% of the hotel’s total turnover. This is the lowest department expense ratio among all undistributed departments.

Based on a dollar per available room (PAR), IT spending is highest at resort hotels ($1,558), followed by convention ($867) and full-service ($850) properties. ). Limited-service, extended-stay hotels averaged about $400 PER in 2021.

Measured as a percentage of total revenue, IT spending was highest at convention hotels (2.4%). Due to their strong revenue performance in 2021, resort hotel IT spending was only 1.3% of total revenue. IT spending by limited-service and extended-stay hotels averaged about 1.6% of total revenue in 2021.

IT staffing

Of the 2,600 in the study sample, only 16.4% of properties reported labor costs, indicating that they have dedicated IT staff. Of the six property types analyzed by CBRE, the greatest incidence of IT staffing was found in large hotels with extensive services and amenities, and geared to meet the needs of convention and business demand. meetings. About 80% of convention hotels in the sample reported IT labor costs, followed by full-service hotels (29%) and resorts (7%). Given the size and nature of the properties that reported IT department labor costs, it can be assumed that these personnel are IT technicians as opposed to PBX operators.

Without staff, IT expenses for limited-service and extended-stay hotels are evenly split between phone and internet costs, versus system costs. Most select serviced properties offer free phone and internet service, which is factored into the IT service.

In convention, full-service, and resort hotels, system costs account for most of the IT department’s expenses. Telephone and internet costs are limited to expenses related to administrative use.

Lower IT costs

Like all costs, IT department expenses decreased significantly in 2020 (28.9% compared to 2019). To provide some perspective, total unallocated service expenses for the hotels in the study sample decreased by 40.1% over the year.

Interestingly, we saw year-over-year reductions in IT department costs before the industry downturn in 2020. IT department expenses fell 0.9% in 2018 and another 9.4% in 2019. Compound impact of three years of lower spending reduced IT service costs in 2021 to 89% of 2015 levels.

The largest percentage reductions from 2015 to 2021 occurred in labor costs, followed by the cost of telephone service and system costs. The cost of internet service, along with all other service expenses, has increased since 2015.

Convention, full-service, and resort hotels, with the largest workforces, have cut spending the most since 2015. Limited-service and extended-stay properties spent more on IT spending in 2021 than in 2015.

Master the costs

One way to control costs is to perform a diagnostic computer inventory. The diagnosis consists of an evaluation of your hotel’s current service plans and bills. By understanding what is currently in place, owners and operators can identify ways to improve service plans, negotiate new contracts, and get the most out of their technology spend.

A thorough IT inventory can:

  • Identify billing errors and recovery capital
  • Provide Mark-to-Market on information and telecommunications services with the aim of renegotiating contracts and easing terms
  • Show alternative options to consider if they exist

IT in hotels

The use of technology in hotels originated in back office departments. Accounting and reservation systems were the first to be used within a hotel. Going forward, there is a trend towards more customer-oriented technology. Smartphone apps and other technologies designed to facilitate check-in, room service, concierge services, guest inquiries and complaints, entertainment and payment are examples of technologies being developed for improve the customer experience. The ROI of these investments is easier to measure now that hotels can track and benchmark their technology-related operational expenses within the IT department.

Source: CBRE Hotels
Source: CBRE Hotels
Source: CBRE HotelsSource: CBRE Hotels
Source: CBRE Hotels
Source: CBRE HotelsSource: CBRE Hotels
Source: CBRE Hotels
Source: CBRE HotelsSource: CBRE Hotels
Source: CBRE Hotels

Robert Mandelbaum
Director of Research Information Services
CBRE Hotels