Cost Control Hotel

[Zulema Estabrooks]

Fromour perspective as a hotel revenue management consulting company, we see both challenges as well as opportunities for hoteliers. The key is taking action in an adequate and timely manner, prioritising the right initiatives that truly make a difference. Cost can always be reduced, but how does it impact your day-to-day operations, and how does this reflect on your guest experience?

When we talk about cost control in the hotel industry, we typically refer to the management of expenses and the optimization of resources. By diligently managing costs, hotels can ensure profitability and financial sustainability. Cost control challenges can vary from hotel to hotel, depending on the market segment, location, and star classification, but most hotels face similar issues. As indicated by a recent study by Statista, hoteliers highlight the wider economic situation as the next biggest challenge (48%), followed by staff acquisition and retention (43%) and cost of staff (42)%.

Profitability: Hotels are businesses and, like any other business, their ultimate goal is to make a profit. By controlling costs, hotels can reduce their expenses and increase their bottom line.

Competitive Advantage: Cost control can also provide hotels with a competitive advantage. By reducing costs, hotels can offer better rates to guests, enabling them to better position themselves to budget-conscious travellers. This can help hotels attract more guests and compete more effectively with other hotels in the area.

Sustainability: When mitigating waste and conserving resources, hotels can reduce their environmental impact and operate in a more sustainable manner. This can be attractive to guests who are environmentally conscious and may choose to stay at hotels that prioritize sustainability.

Unfortunately, many hotels are lagging behind when it comes to technology investment, despite accelerated digital growth seen in other industries (McKinsey). The reliance remains heavily on manual processes, outdated systems, and disjointed software solutions, which can lead to inefficiencies, errors, and poor guest experiences. This approach not only puts hotels at a disadvantage compared to other businesses that have embraced technology but also fails to cater to the ever-more digitally savvy traveller of today.

To step up their game, hotels should invest in technology by focusing on the right priorities, reducing operational inefficiencies and at the same time enhancing guest experiences. To give a few practical examples, hotels can focus on:

A good technology stack can greatly reduce inefficiencies and speed up operational processes at a hotel front desk. By automating tasks such as check-in, check-out, room assignments, and payment processing, hotels can streamline their front desk operations, reduce wait times, and improve the overall guest experience.

For example, with a comprehensive Property Management System (PMS), hotels can manage all front desk operations from a single interface, reducing the need for manual data entry and the risk of errors. The right PMS can also automate processes such as room assignments and inventory management to help reduce the workload for front desk staff, giving them more time to focus on delivering exceptional guest service.

By choosing the right marketing tools, such as a robust CRM system, hotels can capture and store guest data from all distribution channels. This data can include guest preferences, booking history, and guest feedback, which can be used to personalise the guest experience, offer targeted promotions, and improve guest loyalty (read more on the importance of capturing hotel guest data). Without this valuable data, hotels will struggle to make informed decisions which will directly result in lost revenue opportunities.

Hotels that invest in tech to streamline housekeeping operations will benefit from automated tasks such as room assignments, cleaning schedules, and inventory management. All offer a major step to help hoteliers reduce labour costs, improve cleaning efficiency, and ensure that guest rooms are always ready on time.

Hotels can reinvent their marketing strategy by adopting a data-first approach and building sophisticated tools to make better-informed decisions. With the right approach, hotels can get their fair share of direct revenue and own valuable guest data that provides insights to take their strategy to the next level.

By gathering and analysing guest data from multiple sources hotels can gain insights into guest behaviour and preferences. This in turn can be used to create targeted marketing campaigns that resonate with their audience and drive high-value bookings. Here are a few examples:

Important note: there are so many marketing initiatives that hotels can engage in. However, making sure to fish where the fish are and testing different strategies before going all-in on a specific idea is vital. Setting clear objectives and prioritising the highest drivers of revenue is the way to go.

With a laser-sharp focus on data and a clear understanding of their audience and goals, hotels can create marketing campaigns that are both effective and efficient, thereby reducing costs that would be spent on ineffective campaigns. At the core of everything is a CRM system, which will be necessary to sift through and manage large amounts of guest data, and will be key to maintaining momentum in your marketing actions by using automation to increase output.

Re-inventing hotel spaces and making full use of each area to help generate additional revenue is a major trend in hospitality. By rethinking underutilised hotel spaces such as conference rooms or even entire floors that sometimes remain inactive, hotel owners can breathe new life into their operations. For example, think of turning your event or F&B spaces into a multi-functional workspace to create a thriving coworking environment, which remains a key audience to target as remote work will continue to rise.

This approach can lead to the creation of fresh revenue streams, heightened competitiveness, and a renewed brand appeal. The perfect opportunity to turn costly floor space into revenue-generating assets.

By outsourcing hotel management and revenue management, hotels can save money and increase earnings generation. Outsourcing enables hotels to utilise experienced professionals who specialise in areas such as revenue generation, financial management, marketing, and improving operational performance. Such hotel experts are able to assist hotels in identifying areas in which to reduce costs and increase profits, ensuring a healthy bottom line.

Moreover, outsourcing allows hoteliers to focus on their core competencies, while experts handle hotel operations and management. This not only saves time, effort and money, but it makes sure every detail of the business is in optimal shape and receives the attention it deserves.

Cross-training your staff is not only an excellent way to ensure that you have a well-rounded team that can cover for each other when needed, but it can also help prevent having to call in additional temporary staff if someone calls in sick, which usually comes at a steep cost.

A well-structured and thorough onboarding process can help new staff members understand their roles and responsibilities and become more productive faster, ultimately reducing the amount of time and resources needed for training.

A Profit and Loss statement (PnL) is a crucial report for hoteliers to analyse as it can help them cut costs and improve profitability. Any hotel business that wishes to achieve healthy financial results, should invest a good amount of time in building a well-structured profit and loss statement, and spend time reviewing it monthly with key stakeholders.

In addition, examining income streams is a great way to assist hoteliers in identifying opportunities to generate more revenue, such as where and when to implement strategies to drive ancillary revenue.

Hotels can leverage the power of word of mouth to reduce costs by increasing guest retention and decreasing marketing expenses. Happy guests who have had a positive experience are more likely to become repeat customers and recommend the hotel to their friends and family. This can lead to the following benefits:

Additionally, word of mouth can also help hotels identify areas where they can improve their operations and reduce costs. By actively listening to guest feedback and addressing any issues, hotels can improve the overall guest experience and reduce the number of negative reviews or complaints.

Lease negotiation can be an opportunity for hoteliers to review the existing terms and conditions of their current contracts and identify areas to get a better deal, such as rent calculations, charges, capital expenditures, and guarantee amounts.

However, every hotel is unique and therefore any negotiation should be diligently prepared for and overseen by a hotel asset manager to ensure the best possible outcome is achieved, thinking both long and short term.

When contracts with vendors are due for renewal, hoteliers get the opportunity to renegotiate terms and get more favourable rates for supplies and contracts. However, preparation is key to being successful at renegotiating. Therefore, our hotel consultants recommend following these crucial steps:

Green initiatives at hotels not only have environmental benefits but can also lead to long-term cost savings. By simply reducing energy and water consumption, hotels can bring down their utility bills and save money on maintenance and repairs.

Aspects such as taking seasonality into account can help project possibilities to avoid excessive food waste or energy use. Thinking of closing specific areas or floors of the hotel during times of low demand, having a small seasonal menu that prevents over-preparation of unpopular dishes, and bringing down the number of perishable foods in storage could all help to have a significant impact on cost and sustainability.

3a8082e126