Operating a hotel is an expensive endeavor. From the prices of soft goods like bedding, towels, and draperies to labor costs such as salaries and property maintenance, there are many factors that contribute to the overall cost. Additionally, expenses for insurance and taxes must also be considered.
One major expense that hotels face is utility costs. In a recent CBRE article titled “Sustainability Practices Help Control Hotel Utility Costs,” it was noted that energy efficiency measures and technology can help reduce these expenses while still maintaining guest comfort.
According to the article, utility prices are on the rise due to market disruptions, geopolitical tensions, and extreme weather events. This trend is expected to continue in the future with electricity demand forecasted for an increase along with water and sewage rates due to strained resources and aging infrastructure.
In 2023-2024 alone, hotel utility costs saw an average increase of 3.5%, which is almost half of total operating expense increases during this same period according to CBRE data analysis.
It’s important for hospitality operators to consider variations in utility costs by property type as limited-service hotels may have different needs than resort properties when it comes down their specific utilities usage patterns; however both types will likely see higher annual estimates at $2
