Cost center

A cost center is an organizational unit to which costs and revenues are assigned. In a hotel, that means: rooms, F&B, spa, housekeeping -- each department with its own result, visible and steerable.

As long as everything lands in one pot, the hotel knows whether it is profitable overall. It does not know what its restaurant actually costs -- and how much of that the room business is carrying.

What we see in practice: A four-star property with hotel restaurant and spa reports a slightly positive EBIT in its annual statement. The cost center breakdown tells a different story: rooms at 22% margin, F&B at minus 4%, spa at minus 11%. The rooms business is financing the rest. Without that breakdown -- no discussion, no pressure to act, no corrective move. With it: a concrete basis for decisions. Whether the property still wants to run the restaurant is a business judgment. That is legitimate. But it is then a deliberate decision -- not a silent cross-subsidy that drags down the result year after year.