What it means in plain language
Variable cost is the difference between gross room revenue and contribution margin. A common rule of thumb: $30-50 per occupied room at limited-service properties, $80-150 at full-service and resort. Knowing your true variable cost is the only way to know if a discount rate adds margin or erodes it.
How Variable Cost fits in the bigger picture
Variable Cost doesn't live alone - it sits inside the Operations & Roles category and connects to 3 closely related concepts most working revenue managers track in the same breath. Pair this definition with the related terms below to build a working mental model - definitions in isolation are easy to memorize and easy to misuse.
Related terms you should also know
Each of these is one click away - start with whichever you don't already use daily: