Quick tips to cut your hotel's costs

Posted by Helena Murphy on March 9, 2016 at 9:00 AM

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This month we're dedicating our blog to the various ways you can increase revenue. According to the United Nations World Tourism Organization (WTO), a record breaking 1.2 billion tourists travelled abroad in 2015. Europe, the Americas, Asia and the Pacific all recorded about 5% increases in international arrivals. Although this is great news for the industry, hotel owners and managers are always looking for higher margins. One way to get there is by cutting your hotel's running costs:

Labor

At 44.2 percent of expenses, labor is the single largest cost for hotels. Fueled by low unemployment rate in the US, benefits are likely to keep on increasing in 2016. Obviously it's a necessary investment, but you want to make sure you're making the most of the money you invest in labor. 

1. Cross-train your staff.

How can you handle the busiest hours of the day without additional staff? Are you making the most of quiet times? What's your plan B when an employee is absent? How do you keep your staff happy and motivated and deliver exceptional guest experience? 
Cross-training is an answer to all those questions. Select and train staff to help at the front desk or with guests during peak times, and vice versa: have your most capable front desk clerks help with marketing campaigns, social media or sales when they're free. This also applies to other activities, such as housekeeping, sales, etc.

Most hoteliers realize the benefits of cross training but are too afraid to implement it, sometimes because they think it might be unpopular, or because training might be too complicated. Hotel staff will be happy to help their colleagues and learn new skills, as long as it's also recognized by the management. The few that won't play the game are simply people you might not want to keep in the long run. Of course, cross training takes some time and efforts, but short and long term advantages will likely outweight your troubles. With an intuitive property management system such as Frontdesk Anywhere PMS, you can expedite the process, and benefit from dedicated training from our 5 star support team. 

2. Project and schedule housekeepers based on facts

If it takes 30 minutes to clean a check-out and you have only 5 check-outs that day then 2.5 hours of housekeeper time can be allocated for that particular process. What else? Stay-overs. Deep cleans. Common areas. Assign a realistic time to each task then project out a schedule. Employ a flexible workforce that adapts to your occupancy level, to reduce fixed costs when your cash flows are down. Another solution used by many of our clients is to contract a housekeeping service provider, and fill them in one week in advance depending on your needs.

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Property Operations and Maintenance (POM) Expenses

Many of these contracts are extremely vendor-centric, placing the responsibility and risk mostly on the hotel side. POM costs typically range from 4 to 6% of total property revenues. 

1. Make sure you have the right vendors in place to fix equipment at a reasonable price. Remember too, the lowest vendor may not always be the best. Consider reputation, years in business and current certifications when choosing new contractors.

2. Don’t pay an arm and a leg to get something fixed if it does not make sense.

3. Try to get things corrected in-house before you call someone.

4. Consider long term agreements to stabilize your expenses and give you more negotiating power. 

Marketing & Advertising

Marketing is a vital cost that hotels need to keep an eye on. Focus on low cost methods for getting your hotel in front of people. There are so many ways to get exposure on the Internet and with social media. Are you active on Facebook? Instagram? Be different. Have conversations with followers on Twitter, Facebook, TripAdvisor. Google+ is also completely underutilized by hotels. According to Google's latest marketing initiative 'micro-moments', the shopping experience is now defined by ‘mobile moments’ so ensure your strategy caters for this. 

Genuinely listen and respond to fans and customers who communicate with you whether it's through your instagram feed or on your facebook wall. Hotels can stand out from their competition by engaging with customers who communicate with them in real-time, in turn making those customers feel valued and impressed that you’ve responded to them, personally and promptly.

Word of mouth, and local business referrals are always a relatively cheap way to promote your hotel. You basically need to design, print out and hand out or deliver some flyers. Most of which can be done in-house.

Reporting 

There are many methods for reducing your hotel costs. Easier said than done. I know. Begin by running reports to help you see from a macro view where costs can be reduced and daily productivity can be improved. Your PMS should have easy to run reports that let you see how your business is running within a few clicks.

We'll be continuing the conversation on how to increase revenue throughout the month. Feel free to post any comments or suggestions below. 

Topics: Increase Revenue, Cost Saving Tips

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