Calculation: Operating Expense Ratio = ((Total Operating Expenses – Depreciation) / Gross Revenue) * 100%

Ideal ratio: below 80%

What is the Definition & Importance of ´Operating Expense Ratio´:

Using this KPI can help you evaluate whether an investment is worth your time by giving insight into how much it costs to manage / maintain the project.

How?  By taking the operational cost and rental income into account you will be able to compare the ratio (ideally under 80%) to make a well-informed decision for your investment opportunity. This step can´t be overlooked and our Hotel Management Company always recommends calculating the Operating Expense Ratio to ensure the full potential and financial health of your projects.

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