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Adding value to the hospitality experience - Operating leverage

Q: What are fixed costs? (vaste kosten)

A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Q: What are variable costs?

A variable cost is a corporate expense that changes in proportion to production output. Variable costs increase or decrease depending in a company's production volume; they rise as production increases and fall as production decreases.

6 important questions on Adding value to the hospitality experience - Operating leverage

What are fixed costs? (vaste kosten)

A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

What are variable costs?

A variable cost is a corporate expense that changes in proportion to production output. Variable costs increase or decrease depending in a company's production volume; they rise as production increases and fall as production decreases.

What is operating leverage ratio?

The operating leverage ratio is a strong indicator of the level of financial risk a company faces under different market conditions and varying demand.

Give an example of reducing fixed costs.

Many hotel chains sell of their buildings, trying to reduce fixed costs and return to their core business, managing hotels.

What are different considerations in staging a hospitality experience in a commercial context?

1. Cost control
2. Effective pricing

In what 2 stages is the pricing process divided

1. Strategic pricing decision
2. Operational pricing decision
This allows an organisation to add profit in the process of selling and delivering its product.