Economic Indicators and Cost Analysis in the Hotel Industry of Crete

In a highly competitive tourism environment, effective management, efficient organization, and the ability to calculate operating costs are some basic requirements for the competitiveness and the future viability of hotel businesses. Indicators are a main method of analyzing the operation, the costs, and finally, the economic effectiveness of a business. This paper presents the results of a survey in 160 hotels in the region of Crete in Greece, aiming to investigate the use of indicators as a management tool in hotels and the ability to calculate the cost, but also the break-even point of hotel businesses. Crete is the largest island in Greece, and since the mid-1980s, it has been transformed into a popular tourist destination offering the hotel industry a total of 190 thousand beds. The survey was conducted in the spring of 2021, and the results were disappointing, since only the half of the hotels in Crete use indicators to measure their performance. Also, one in four hotels in Crete and one in three hotels that operate all year round cannot exactly calculate their costs. More specifically, the research showed that about half of the hotels calculate only by estimation (and not exactly) their operating costs, the cost of overnight stays, and the break-even point of the business. Also, according to the results of the survey, for most hotels, the payroll cost and the operating cost per bed is lower than those found in the literature. In particular, payroll costs estimated at 32% of turnover, on the contrary the occupancy rate above which the hotel generates profit is particularly high and ranges at the level of 41–45%. Hotels use economic indicators but not entirely effective as they are mainly used for annual comparisons, while the most popular indicators used are those associated with the daily performance of the business. Finally, through the correlations of the research variables, it is understood that hotels that use indicators can calculate their costs more precisely and can plan the economic operation of the business more efficiently.