CH.3 Rooms Division Operations - Examples of revenue and cost centers in hotel

There are several kinds of revenue and cost centers in hotel. Revenue Center means generating revenue while Cost Center means incurring costs to support revenue center. These could be departments, divisions or business units.

For revenue centers, examples are the front office, communications and the food and beverage departments. Front office charges customers for the lodging fees and other expenses like the fax services. Communications departments may charge customers based on the telephone usage e.g. overseas calls while customers consume F&B may also generate revenue for the hotel.

The costs break down of Marcus Corporation

Cost centers are considered to be no direct financial benefit to the hotel. For example, the housekeeping department, it is necessary to exist within an organization due to its value to the hotel as it maintains a good hygiene and high standards living environment. Moreover, the maintenance department is required to maintain all the facilities, machines etc. operate well, the parts and the workers are expenses. Also, security could be the cost center because guards are hired to secure customers safety, but the expenses are needed to create a safe, comfortable environment to customers.

Reference: http://www.hotelmule.com/html/index.html