The Room Profit Reality Check
In the budget hotel business, we are taught that "Occupancy is King." If the room is empty, we are losing money, right? Wrong. In 2026, the Cost Per Occupied Room (CPOR) has skyrocketed. If you sell a room below your "Floor Price," you are actually paying the guest to stay at your hotel.
| The "Hidden" Cost of 1 Night | Estimated Cost |
|---|---|
| Laundry (Bedsheet, 2 towels, pillowcases) | ₹65.00 |
| Toiletries / Consumables (Soap, Water, Kit) | ₹45.00 |
| Electricity (10 hrs AC + Geyser) | ₹180.00 |
| OTA Commission (20% on ₹999 Booking) | ₹200.00 |
| GST on Commission (18% - No ITC Claim) | ₹36.00 |
| TOTAL VARIABLE COST (CPOR) | ₹526.00+ |
The Profit Reality Check
If your guest pays ₹999, and your cost to serve them is ₹526, you are left with ₹473. But wait—this doesn't include your staff salaries, building rent, or Wi-Fi. In many budget hotels, once these fixed costs are added, a ₹999 room actually results in a net loss.
💡 THE SOLUTION: The "Non-AC" Strategy
If the market only wants to pay ₹999, you must change what you are selling. The biggest profit-killer in the budget segment is the Air Conditioner. By offering Non-AC Rooms as a specific tier on OTAs, you can flip your margins instantly.
Cost Comparison
Switching to Non-AC cuts your electricity cost from ₹180 to approx ₹30 per night (Fan + Lights).
The Resulting Profit
Your CPOR drops from ₹526 to ₹376. Your take-home profit on a ₹999 booking jumps by over 30%.
How to implement this:
- • Create a separate "Standard Non-AC" room type on MMT/Goibibo.
- • Set the price for Non-AC at your true floor price (e.g., ₹999).
- • Offer "AC Upgrade" at the reception for ₹300-₹500 extra.
Stop giving away luxury amenities at budget prices. Optimize your inventory to match your costs.
Does your current payout cover your CPOR?
Check with HotelCalc