What is a P&L Report?
P&L = Profit & Loss Statement
A financial report that shows your hotel's income (revenue) minus expenses over a period (monthly, quarterly, yearly). It tells you whether your hotel made a profit or loss.
Why P&L Matters for Hotels
Think of P&L as your hotel's "report card" for financial health:
- Know if you're profitable: Are you actually making money?
- Track trends: Is profit increasing or decreasing month over month?
- Identify problems: Which expenses are eating into your profits?
- Make decisions: Can you afford to hire more staff or renovate?
- Get loans: Banks ask for P&L before lending
- Tax filing: Required for income tax returns
Basic P&L Structure
Revenue - Expenses = Profit (or Loss)
If revenue is higher than expenses, you have profit. If expenses exceed revenue, you have a loss.
| Section | What It Includes |
|---|---|
| Revenue (Income) | Money coming in - room sales, F&B, other services |
| Cost of Sales | Direct costs - F&B ingredients, amenities, OTA commissions |
| Gross Profit | Revenue minus Cost of Sales |
| Operating Expenses | Salaries, utilities, maintenance, marketing, rent |
| Operating Profit (EBITDA) | Gross Profit minus Operating Expenses |
| Other Expenses | Interest, depreciation, taxes |
| Net Profit/Loss | Final profit after all deductions |
Hotel Revenue Categories
Your P&L should break down revenue by department:
1. Room Revenue (Typically 60-70% of total)
- Room sales from all sources (direct, OTA, corporate)
- Should show ADR and occupancy for context
2. Food & Beverage Revenue (20-30%)
- Restaurant sales
- Bar/beverage sales
- Banquet/event revenue
- Room service, minibar
3. Other Revenue (5-10%)
- Spa and wellness
- Laundry services
- Parking fees
- Business center
- Telephone (if any)
Hotel Expense Categories
Cost of Sales (Variable Costs)
- F&B Cost: Food ingredients, beverages (target: 25-35% of F&B revenue)
- OTA Commissions: 15-25% of OTA booking value
- Guest Supplies: Toiletries, amenities, cleaning supplies
Operating Expenses (Fixed/Semi-Fixed)
- Payroll: Salaries, PF, ESI (typically 25-35% of revenue)
- Utilities: Electricity, water, gas, internet
- Rent/Lease: If property is rented
- Maintenance: Repairs, upkeep, AMC contracts
- Marketing: OTA promotions, advertising, website
- Admin: Insurance, licenses, professional fees
Sample Hotel P&L
Monthly P&L - 20 Room Budget Hotel
| REVENUE | |
| Room Revenue | ₹8,00,000 |
| F&B Revenue | ₹1,50,000 |
| Other Revenue | ₹30,000 |
| Total Revenue | ₹9,80,000 |
| COST OF SALES | |
| F&B Cost (30%) | ₹45,000 |
| OTA Commissions | ₹1,20,000 |
| Guest Supplies | ₹25,000 |
| Gross Profit | ₹7,90,000 |
| OPERATING EXPENSES | |
| Salaries & Wages | ₹2,50,000 |
| Electricity | ₹80,000 |
| Rent | ₹1,00,000 |
| Maintenance | ₹30,000 |
| Marketing | ₹20,000 |
| Admin & Other | ₹40,000 |
| Operating Profit | ₹2,70,000 |
| OTHER EXPENSES | |
| Loan Interest | ₹50,000 |
| Depreciation | ₹30,000 |
| Net Profit | ₹1,90,000 |
Net Profit Margin: 19.4% (₹1,90,000 ÷ ₹9,80,000)
Key P&L Ratios to Track
| Ratio | Formula | Healthy Range |
|---|---|---|
| Gross Profit Margin | Gross Profit ÷ Revenue × 100 | 70-80% |
| Operating Profit Margin | Operating Profit ÷ Revenue × 100 | 25-40% |
| Net Profit Margin | Net Profit ÷ Revenue × 100 | 15-25% |
| Payroll Ratio | Payroll ÷ Revenue × 100 | 25-35% |
| F&B Cost Ratio | F&B Cost ÷ F&B Revenue × 100 | 25-35% |
Simple Rule: If your net profit margin is below 10%, something needs attention. Either revenue is too low, or expenses are too high. Compare with previous months to identify the problem.
Common P&L Mistakes
1. Mixing Personal & Business Expenses
Keep personal expenses separate. Your P&L should only show hotel business expenses.
2. Not Categorizing Properly
OTA commission should be a separate line item, not hidden in "marketing." This helps you see true acquisition costs, which you can work out with our guest acquisition cost calculator.
3. Ignoring Depreciation
Furniture, AC, equipment lose value over time. Include depreciation to see true profit.
4. Missing Revenue Streams
Did you include parking, laundry, late checkout fees? Small amounts add up.
Pro Tip: Create a P&L template in Excel or use your accounting software (Tally) to generate monthly P&L. Compare month-on-month and same-month-last-year to spot trends.
How to Improve Your P&L
Increase Revenue
- Improve occupancy through better marketing
- Increase ADR during high-demand periods
- Upsell F&B and other services
- Drive more direct bookings (lower commission)
Reduce Expenses
- Negotiate better rates with suppliers
- Reduce energy costs (LED, solar, efficient AC)
- Optimize staffing based on occupancy
- Review all subscriptions and services
P&L Frequency
- Daily: Revenue and occupancy tracking (from PMS)
- Monthly: Full P&L review with management
- Quarterly: Detailed analysis, compare with budget
- Yearly: Annual P&L for tax filing and planning
Important: Never make major business decisions without looking at your P&L. Hiring staff, renovating, expanding - all need to be backed by your financial data.
Free Service
Find out where your revenue is leaking
Low occupancy and poor ADR are often an OTA visibility problem, not a demand problem. Our free audit reviews your listing health across all major OTAs and gives you a clear action plan.
Get Your Free OTA AuditRelated Tools & Guides
Revenue & Profit Estimator
Calculate your net revenue and profit margin per room night
Break-Even Calculator
The minimum rate that covers your cost before you take a booking
Expenses Report
Find where the money actually leaves your hotel
RevPAR Guide
The metric that combines occupancy and rate into one number
Frequently Asked Questions
What is a hotel P&L report?
A hotel Profit & Loss (P&L) report is a financial statement summarising all revenue earned and expenses incurred over a period (monthly, quarterly, or annually). It shows gross revenue by department, operating expenses (payroll, utilities, OTA commissions, supplies), gross operating profit (GOP), and net profit after fixed costs like loan repayments and depreciation.
What is GOP in hotel P&L?
GOP stands for Gross Operating Profit. It is calculated as total hotel revenue minus total operating expenses (before deducting fixed costs like rent, interest, and depreciation). GOP is the key profitability metric for hotel operations. A healthy hotel typically targets 30 to 40% GOP margin. It is tracked as a percentage: GOP% = GOP ÷ Total Revenue × 100.
What expenses are included in a hotel P&L?
Hotel P&L expenses include: Payroll and staff benefits, OTA commissions, F&B cost of goods, utilities (electricity, water, gas), repairs and maintenance, marketing and advertising, linen and supplies, GST paid on purchases, property taxes, insurance, and depreciation. Larger hotels track expenses by department (rooms, F&B, spa) to identify which areas are profitable or underperforming.
How is hotel P&L different from RevPAR?
RevPAR (Revenue Per Available Room) is a revenue metric. It measures room revenue efficiency without considering costs. A P&L report is a complete financial picture. It shows whether the hotel is actually making money after all expenses. A hotel with high RevPAR can still have a poor P&L if costs are uncontrolled. Both metrics are needed to fully evaluate hotel performance.