Money-Saving Tips for Hotels

Created: Tuesday, 09 May 2023 13:50

There are several operational costs to consider and manage correctly to ensure the success of your business. The hotel industry is competitive, so it requires careful consideration to minimize expenses without compromising the guest experience. In this article, we'll look at the expenses of running a hotel and how to reduce costs in the hotel industry and invest in your hotel's future. 

What Is the Average Cost of Running a Hotel?

Many factors contribute to the cost of running a hotel. These variables most often include location, size, labor and utility costs. In general, hotel owners spend thousands of dollars per month to successfully operate their hotels, with owners of large luxury hotels spending significantly more. 

No matter how much you spend to operate your hotel, you should know that hotel expenses fall under two main categories — fixed and variable costs.

Fixed Costs

Fixed costs remain the same regardless of the number of occupants. These costs can change over time, but this change is independent of your sales volume. This consistency makes fixed costs easier to predict and manage.

Examples of hotel fixed costs are:

• Rent or mortgage
• Insurance
• Property taxes
• Fixed monthly payments for internet, telephone and cable
• Contracted services such as security
• Hotel software systems

Variable Costs

Variable costs are expenses that can fluctuate daily. These costs correlate to your hotel's occupancy rate, so the more guests you have, the higher they are. The fluctuation in these costs makes them challenging to predict, but by using software to track data, you can gain insights into these costs to help you control them.

Variable costs can include the following: 

• Utilities, such as electricity, gas and water
• Food and beverages
• Housekeeping supplies
• Hourly labor costs
• Marketing
• Laundry costs

A profit and loss statement is invaluable to staying on top of your fixed and variable costs. You can track your expenses, quickly identify areas where you spend too much and find opportunities for your hotel to save.

How to Reduce Cost and Waste in a Hotel

When looking for ways to reduce costs, the best place to start is by identifying key areas where you can minimize waste and increase efficiency. While each establishment is different, there are some consistent areas of focus you can consider to reduce costs. Here are some essential tips for cutting down on expenses and waste in your hotel.

1. Complete a Financial Audit

Accurately tracking your expenses will help you control your finances. Conducting a regular financial audit will help you improve hotel operations by identifying problems and flaws in your processes. Using this information, you can plan to improve these efficiencies, reduce expenses and cut back on unnecessary waste.

Before completing an audit, it's essential to set the objective of your financial audit and identify the information you'll collect. During the audit, you'll track documents, such as invoices and receipts, to back up financial transactions over several months. Then, you'll analyze your collected data. Observe your expense trends and look out for areas to improve spending patterns. You may also spot errors to avoid so you can run your hotel more efficiently.

Ask questions based on your findings. How can you avoid reoccurring errors or problems? Should you adopt new technology or practices to improve financial efficiency? Answering these questions can help you build a plan to reduce costs in an effective way.

2. Reduce, Reuse, Recycle

There are many ways you can provide an excellent experience for your guests while cutting down on waste and prioritizing sustainability: 

• Reduce: Reducing your use of various items is the first step. Consider eliminating plastic and paper products where possible, performing housekeeping less often instead of every day, and providing small portion sizes to reduce food waste.
• Reuse: Doing laundry requires large amounts of water and energy — encouraging guests to reuse their towels is more sustainable. Replace single-use items such as cups and toiletries with reusable ones like refillable shampoo bottles. Repurpose old and outdated furniture in your hotel instead of throwing it away.
• Recycle: To recycle waste, sort it out appropriately. Placing marked bins for different types of waste around your hotel helps involve your guests in your recycling efforts and makes it easier for you to sort through waste. In your supply orders, choose recyclable materials as much as possible.

As you consider ways to reduce, reuse and recycle, conducting a waste audit can help you better understand your waste output. Through this process, you can identify how much waste your hotel produces and how you generate this waste.

3. Prioritize Your Staff

Employee turnover is typical in the hospitality industry and costs businesses a lot of money. The expenses involved in finding, hiring and onboarding new employees add up, which is why it's essential to prioritize your staff and retain them as much as possible.

During the onboarding process, aim to make your team feel welcome and ensure they understand your expectations and the hotel's procedures. Make sure every detail is covered using a thorough checklist, and assign them a mentor who they can turn to if they have questions. Always provide ways to support your employees and offer them resources to make their jobs more rewarding.

Invest in your staff through training and upskilling them. Providing your employees with opportunities to learn and grow in their roles increases their productivity and allows them to stay with your business. You can also promote employees from within instead of hiring new staff to fulfill specific business needs.

4. Find Ways to Give Back

Giving back may seem counterintuitive to saving money, but it can significantly benefit your hotel. Building strong relationships within your community can contribute to the success of your hotel and increase their likelihood of recommending your hotel to others. 

Find a charitable organization to support with both resources and time. For example, you can donate excess food to a local food bank. If you don't have the extra resources to donate, volunteer days are a great way to give back. You and your staff can volunteer time for a specific cause, or you can offer training in a particular skill set. 

Another way to give back is by sponsoring an event that supports a certain cause. This is a low-cost way for your business to gain visibility and give back to the community.

When it comes to giving back, see money as a resource instead of a limit. Giving back to your community creates a positive impact and is a great marketing tool for your business. It expands your networking and forms bonds with local companies and leaders.

5. Consider Time vs. Cost

Carry out a cost-benefit analysis of your business processes to determine which ones you can outsource or do yourself to save time and money. For example, is it better to do your taxes yourself or outsource this process to an accountant?

Choosing to keep a process in-house means you use your own resources and staff to complete it. This option is a better fit for operations that require you to have more control. The downside to in-house service is you may need to hire more staff or train existing employees to ensure the process is done correctly.

When outsourcing a function, you seek a third-party supplier to fulfill the process. While you have less control over the function, it can save you time and resources that you can then channel into the core of running your business. Note that outsourcing is often more expensive than doing things yourself, but the outcome may be better.

If you're starting your hotel or running a smaller establishment, outsourcing a few business functions is a great small business money-saving tip that allows you to focus on growing your hotel.

6. Identify Your Mission Statement

A mission statement is a simple and concise way of stating why your business exists and what makes your hotel stand apart from the rest. This brief statement is a guidepost for you, your employees, investors and customers that defines your culture, ethics, values and fundamental goals.

When creating a mission statement, consider the following:

• What you do.
• How you do what you do.
• Why you do what you do.

When you have a mission statement, it shows potential employees and customers you've put thought into the big picture of your organization and set out specific goals. It makes finding employees who fit your culture easier because they identify with your mission statement and increases your chances of like-minded guests coming back time and time again.

7. Invest in the Future

Investing in your hotel improves the longevity of your business. Spending more on maintaining and improving your hotel leads to happier guests and saves you more in the long run.

Consistent hotel maintenance is essential to provide a pleasurable experience for your guests. Consider the overall experience you want to provide your guests. These investments may seem significant at first, but in the long run, they'll improve your online reviews, keep your hotel up to date and save you from spending large amounts on sudden repairs.

As your hotel grows and the industry evolves, you must keep up with the latest trends and improve your working methods. Ongoing training for your staff will help you keep up with industry changes and the demand that comes as your hotel scales. To stay ahead of your competitors, invest in research that helps you anticipate what customers will want in the future and how you can fulfill those demands.

Improving efficiency may mean investing in technology. Technology can enhance your business operations and set you apart from your competitors when leveraged correctly. Maintenance software can streamline all your upkeep activities and help you track service dates and the amount spent on repairs, helping you budget better for future maintenance.

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