Despite its high prevalence, there is no systematic approach to documenting and coding obesity in hospitals. This study aimed to determine the prevalence of obesity among inpatients, the proportion of obese patients recognised as obese by hospital administration, and the cost associated with their admission. A cross-sectional study was undertaken in three hospitals in Queensland, Australia. Inpatients present on three audit days were included in this study. Data collected were age, sex, height, and weight. Body mass index (BMI) was calculated in accordance with the World Health Organization's definition. Administrative data were sourced from hospital records departments to determine the number of patients officially documented as obese. Total actual costing data were sourced from hospital finance departments. From a combined cohort of n = 1327 inpatients (57% male, mean (SD) age: 61 (19) years, BMI: 28 (9) kg/m2), the prevalence of obesity was 32% (n = 421). Only half of obese patients were recognised as obese by hospital administration. A large variation in the cost of admission across BMI categories prohibited any statistical determination of difference. Obesity is highly prevalent among hospital inpatients in Queensland, Australia. Current methods of identifying obesity for administrative/funding purposes are not accurate and would benefit from reforms to measure the true impact of healthcare costs from obesity.