Fixed Costs

What is the definition of Fixed Costs in the hotel industry?

Fixed Costs, abbreviated as FC, are costs which are constant, meaning they stay comparatively constant in value in spite of changes in manufacture or sales rates. Fixed Costs, mixed costs and changeable costs make up the total costs at any commerce. In the hotel industry Fixed Costs make up a large percentage of total costs acquiring, as hotels need many exclusive assets such as buildings, technology, furniture and utensils. Successful Hotel Operators are able to decrease Fixed Costs, thereby increasing productivity for hospitality businesses Examples of Fixed Costs would be: rent, mortgage, salaries, assurance, taxes, utilities, property, building, internet, cell phone plans, promotion cost, music entertainment, reservation expenses, newspaper subscriptions etc. Fixed costs are typically found under operating expenses. The notion is used in financial analysis to find the break-even position of a business.

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