The most successful hotels thrive by delivering exceptional customer service but the challenge most face is controlling costs while keeping customer service high. To be successful hotels must keep track of operating costs to ensure that expenditure is associated with income generation. Rising hotel operating such as labor costs, utilities, and maintenance expenses are a few of the largest operating costs in a hotel that greatly impact your bottom line. Managing expenses, therefore, is critical in ensuring long-term financial health and improving your hotel’s success. If you’re not taking a proactive approach to control these expenses, your hotel will not generate the amount of profit that it should.
Here are a few ways you can reduce your hotel's largest operating costs and increase your profitability:
Optimize Labor Scheduling: Labor costs account for almost half of the operating costs which makes it an obvious place to begin looking for savings but you have to be careful when approaching labor costs and find the right balance as overscheduled and underutilized workers would put a strain on their ability to deliver exceptional guest service. Forecast staffing needs and plan accordingly, use the forecast to schedule the labor standards you’ve created for each position in your hotel, and then update the schedule accordingly if adjustments need to be made.
Cross-train your staff: Hiring staff takes up a large segment of your efforts, time, and expenses which is why you should endeavor to equip your staff with the necessary skills to perform tasks outside of their day-to-day job functions. This way, they will be able to lend a hand to other departments during any downtime they may have and instead of bringing new faces for new roles, you’ll be able to use the existing resources. A caution here you need to take here is that you do not overburden the staff. This will result in demoralization and will make them ineffective.
Reduce utility expenses: Keeping your utility costs low goes a long way in reducing expenses and building customer goodwill. You need to track energy consumption to discover creative ways to slash costs or you can outsource the whole process to energy consultants. Some of the recommendations to reduce utility expenses include:
- Using energy-efficient bulbs and installing occupancy sensors to ensure they turn off when guests leave the room.
- Training staff to turn off lights, TVs, and heating or cooling in empty rooms.
- Let guests know about your energy-saving measures.
Cut Down Cost with Technology: Technology can reduce hotel expenses by automating operations, People tend to have the mindset that acquiring new technology would lead to increased operational costs which is not the case, rather, these advancements can help in cost-cutting. Installing an all-in-one (integrated) hotel technology that includes hotel software, a booking engine, and a channel manager would automate and streamline all operations. These systems take care of bookings, inventory distribution, check-in & check-out, billing, online reviews, housekeeping, and everything else. This reduces the need for a dedicated resource behind several operations and saves time.
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Practice Preventive Maintenance for Appliances: Maintaining systems will minimize energy consumption, extend equipment life, and reduce the likelihood of a catastrophic breakdown. Develop and implement a schedule for maintaining your building’s equipment because system breakdowns or other maintenance issues are costly to the hotel, inconvenient to guests, and give the hotel the aura of an undesirable, hassle-filled experience. The cost of fixing equipment or infrastructures after it has spoilt might take quite a toll on your hotel’s operating costs. An effective preventive maintenance method takes into account all the infrastructural specifics of your property and plans the annual maintenance schedule in a way that doesn’t interfere with the guests’ experience.
Reduce your Marketing Costs: Marketing expenses can burden a business, especially if the cost of commissions is high. Marketing requires research so ensure you carry out adequate research before committing to any marketing campaign. Analyze the results of your marketing research, and decide on the next course of action accordingly. If the results are not what you expect, do not continue with that approach and pick up a new one. That’s how you can optimize your marketing costs. Also, find ways to increase direct booking this way you save a lot on commissions required by online travel agents.
You can increase direct booking by optimizing your website for search engine traffic, or by paying for a search engine or social media ads.
Despite the need to reduce operating costs ensure you don't reduce them at the expense of your customers because the guest experience is poor there would be a low return rate to your property and negative reviews by your guests which would greatly affect your business. At the end of the day, you still need to turn over a profit. Therefore, as you contemplate the best strategies, remember to maintain a balance. With a little creativity, you can streamline your hotel operations and improve profits.
Also, you can employ the services of a hospitality consultant, they can help you cut operating cost-effectively and still deliver a great guest experience.