In 2020 and 2021, U.S. hotel operators did a praiseworthy job controlling expenses to offset the significant declines in revenue. Based on data from CBRE’s Trends in the Hotel Industry survey of annual operating statements from thousands of properties across the United States, not only have we seen a reduction in the variable expenses associated with the drop in business volume (i.e., occupied rooms, restaurant covers), but also in cuts among what were previously thought to be fixed expenses.

During this time period, insurance costs were out of operators’ control. Per the 11th edition of the Uniform System of Accounts for the Lodging Industry (USALI), insurance expenditures are classified as a non-operating expense and reported on the summary operating statement below gross operating profits. The insurance expense line item includes property insurance for building, contents, and business income from all perils, as well as general liability and excess liability insurance. The insurance expense category does not include workers’ compensation insurance, which is allocated to the operated and undistributed departments.