What Is Room Revenue on a Hotel Bill?

A hotel bill often presents various charges, and understanding each component is helpful for guests. One prominent line item is “room revenue,” which represents the core charge for the accommodation. This article aims to demystify what room revenue entails and how it differs from other charges on a hotel bill, providing clarity for travelers.

Understanding Room Revenue

Room revenue, as presented on a hotel bill, primarily signifies the fundamental charge for the physical accommodation provided. It represents the base cost a guest pays for occupying a room for a specified period, typically per night. This core charge is separate from any additional services, amenities, or governmental levies that might apply during a stay.

This revenue stream is central to a hotel’s operations, reflecting the direct income generated from renting out guest rooms. The amount of room revenue can fluctuate based on factors like the type of room, the season, demand, and any promotional rates applied.

What is Included in Room Revenue

Room revenue encompasses the base rate for the guest room itself. This includes the cost associated with the room’s occupancy, such as standard furnishings, utilities, and basic housekeeping services. When a hotel offers a bundled package, such as a “bed and breakfast” rate, the breakfast component may be integrated into the room revenue if it is inseparable from the room charge as a single offering.

For example, if a guest books a specific room type, the daily rate for that room, regardless of whether it’s a standard room or a suite, constitutes room revenue. Any promotional discounts applied directly to the room rate would reduce this figure, reflecting the net amount charged for the accommodation.

What is Not Included in Room Revenue

Many charges frequently found on a hotel bill are distinct from room revenue. These often include various taxes, such as state and local sales taxes, and specific lodging taxes like the Transient Occupancy Tax (TOT), also known as a hotel or bed tax. These taxes are generally levied by local or state governments, often ranging from approximately 6% to 17% of the room rate, and are collected by the hotel. For instance, Los Angeles County imposes a TOT of 12% on rent charged to transient guests.

Beyond taxes, guests may encounter resort fees, destination fees, or amenity fees, which are mandatory charges added by the hotel. These fees, which can range from $20 to $50 per night, often cover services like Wi-Fi, fitness center access, or local phone calls, even if guests do not utilize them. Hotels typically record these as separate revenue streams. Other common exclusions from room revenue include charges for mini-bar consumption, room service, restaurant and bar tabs, parking fees, and spa services, as these are considered ancillary services. Charges for internet access, if not complimentary, or other incidental expenses like pet fees or non-smoking penalties, are also itemized separately.

Why Hotels Distinguish Room Revenue

Hotels distinguish room revenue from other charges for several operational and accounting reasons. This separation is crucial for internal financial reporting and performance measurement. For example, metrics such as Revenue Per Available Room (RevPAR) specifically analyze the profitability of the rooms department, requiring a clear isolation of room revenue.

The distinction also facilitates compliance with various tax regulations. Different services and charges may be subject to different tax rates, and separating room revenue allows hotels to correctly calculate and remit specific taxes like the Transient Occupancy Tax. Furthermore, the Uniform System of Accounts for the Lodging Industry (USALI), a standardized accounting system for the hospitality sector, provides classifications for various revenue streams, enabling consistent financial analysis and benchmarking across the industry. Adhering to these principles ensures that financial statements accurately reflect the hotel’s performance and tax obligations.