Mark up is the difference between the cost of a product or service and the selling price. In hospitality it's the amount added to the cost price to get the final price charged to the customer. This applies to all areas of the industry from food and beverage items to room rates and extra services.
Knowing your mark up is key to profitability in a hospitality business. It helps managers to set prices that cover costs, make a profit and be competitive in the market. Proper mark up means your business can sustain itself, invest in improvements and deliver quality service to the guest.
Let's say you're the manager of a boutique hotel. You're introducing a new cocktail to your bar menu. The ingredients for each cocktail cost £5. You decide on a 300% mark up so you'll sell the cocktail for £20. This mark up covers the cost of the ingredients, labour and overheads and you still make a profit. You can then use this information to train your bar staff on portion control and upselling to get the most out of this mark up strategy.'