Efficiently managing hotel operating costs requires juggling at many levels and constant balancing between trying to reduce costs while maximizing profit.
In addition, you may wonder how to decrease costs without affecting guest satisfaction and experience.
This is our cue. We’ve curated a list of 7 practical ideas on how to reduce hotel operating costs without compromising guest experience.
Let’s dive in!
What are Hotel Operating Costs?
Hotel operating costs cover various aspects of running a hotel, including:
- Staffing,
- Utilities,
- Maintenance,
- Housekeeping,
- Guest services,
- Marketing, and
- Administrative expenses.
These costs are essential for maintaining the property, delivering customer service, and generating revenue.
What Types of Hotel Operating Costs Are There?
There are 2 main distinctions between hotel operating costs: fixed and variable ones.
Fixed costs refer to costs that don’t change due to sales fluctuations, occupancy level, etc.
These costs include:
- Rent or Mortgage
- Salaries and Benefits
- Property Insurance and Taxes
- Depreciation
- Utilities
- Regular Maintenance for fixed equipment, systems, and infrastructure, such as elevators, HVAC systems, and fire safety equipment.
On the other hand, variable costs change due to productivity levels, and they increase or decrease based on occupancy rates.
Some of the variable costs are:
- Food and Beverage
- Housekeeping Supplies
- Labor Costs for Hourly and Part-time Staff
- Promotional Expenses, Advertising Costs, and Marketing Campaigns.
To manage hotel operating costs, you need to take into account both cost types to optimize cost control strategies.
How To Reduce Hotel Operating Costs in 7 Effective Ways?
1. Opt for The Robust Hotel Management Software (HMS)
Hotel management software streamlines and optimizes various aspects of hotel operations, including:
- Reservations,
- Guest services,
- Front desk management,
- Housekeeping,
- Billing, and
- Reporting.
Therefore, HMS is invaluable when it comes to automating routine tasks such as reservations, check-ins, and check-outs.
In addition, the software’s inventory tracking features enable better control of supplies, amenities, and equipment.
It results in minimizing waste, preventing stockouts, and ensuring cost-effective inventory management.
If you leverage HMS’s efficiency, automation, and analytical capabilities, you can streamline operations and, ultimately, reduce costs.
? ProTip:
OTA SYNC is an all-encompassing hotel management solution that streamlines everyday hotel operations without compromising guest satisfaction.
With our features and tools, you can:
? Access a centralized reservation system to monitor room availability, rates, guest preferences, and special requests.
? Streamline check-in and check-out processes and manage guest profiles and preferences with ease and error-free.
? Provide a user-friendly interface for front desk staff to access guest information, room status, and payment details.
? Coordinate housekeeping schedules, track room cleaning status, maintenance tasks, etc.
? Generate and process guest invoices, record payments, manage folios, and handle billing inquiries with integrated invoicing features.
? Automate financial reporting, track revenue streams, analyze performance metrics, and generate customizable reports.
Thus, OTA SYNC’s advanced solutions help your hotel operate more effectively because you’ll be able to make informed decisions and build cost-efficiency strategies.
2. Cross-Train Your Staff
Labor costs amount to half of the operating costs.
It is important to anticipate the number of employees you need for a specific job because an insufficient number of employees can result in greater dissatisfaction among both guests and employees.
However, if you cross-train your staff, you won’t have to hire additional staff in case a colleague is ill.
In addition, your staff will be able to learn new skills, which is beneficial for them. It is usually a good idea to combine roles and functions that are somewhat similar and where a transition isn’t too steep.
However, watch out not to overburden your staff since that would make them ineffective.
For example, if you leverage the OTA SYNC solution, your staff’s transition will be smooth and easy since they can access all functionalities within a single dashboard.
Thus, it will be rather easy to train them in multiple roles because everything is automated and requires little to no effort to implement.
3. Reevaluate Your Marketing Strategy
Marketing is an essential asset for promoting your hotel, but if you don’t do market research properly, you risk wasting money.
It is good to periodically review your current marketing strategy and see which marketing channels bring revenue and which don’t.
Analyze your target market, competitors, and performance and measure your return on investment (ROI).
It will provide you with valuable insights into potential weaknesses and threats, but also into your strengths and opportunities.
Only with a data-backed approach can you effectively and wisely change and adapt your marketing strategy.
Furthermore, collecting and analyzing guest data from multiple sources will allow you to create tailored campaigns and hit your target audience.
4 Targeted Marketing Campaigns You Should Try
- Personalized rewards such as discounts, free room upgrades, special packages, etc.
- Better-tailored email marketing campaigns because you’ll know exactly what “triggers” your guests to book based on their booking history, preferences, and interests.
- Send automated surveys post-stay to check your guests’ sentiments and identify areas for improvement and enhanced guest satisfaction.
- Offer personalized upsell and cross-sell opportunities and enable guests to buy additional services, curated packages,limited-time offers, etc.
? ProTip:
Did you know that with OTA SYNC, you can upsell or cross-sell additional services and offer special promotions, discounts, promo codes, etc?
For instance, you can use promotional and discount codes to say “thank you” or attract new guests with promotional offers.
Furthermore, our software integrates with various CRM systems, allowing for even more personalized options due to capturing and storing guest data from all distribution channels.
4. Do Preventive Maintenance
Preventive maintenance basically means that you should attend to equipment, systems, etc., in your hotel before it breaks down.
Repairs are usually more costly than regular maintenance, and this can affect your guests’ experience and satisfaction.
Although it may not be your first association, regular housekeeping is also an integral part of maintaining your property and minimizing the tear and wear of facilities.
? ProTip:
Our Housekeeping management solution provides a centralized platform for:
? Efficient task assignment,
? Real-time updates on room status and
? Seamless communication among housekeeping staff.
It hosts features like automated cleaning schedules, inventory tracking, and maintenance alerts to ensure timely room turnover.
5. Be Sustainable
Going green or sustainable eventually leads to reducing costs in energy and electricity bills primarily.
Depending on your hotel’s current budget and preferences, you can start with something as small as:
- The guests reusing the same towels during their stay instead of exchanging them daily.
- Energy-efficient bulbs that are also more durable.
Or, you can move to bigger investments and install occupancy sensors that automatically turn off lights when guests leave their rooms.
In addition, you can rely on solar energy and install solar panels to heat pools, for example.
6. Monetize Less-Utilized Spaces
With a dash of creative touch and inspiration, you can turn less-utilized spaces in your hotel into revenue-generating machines.
When unused, these spaces only cost money and require even more maintenance.
However, you can change that.
6 Hot Ideas To Transform Your Under-Utilized Spaces
- Transform under-utilized spaces into versatile event venues for hosting meetings, conferences, workshops, weddings, private parties, and other events.
- Convert these areas into co-working spaces or business centers equipped with workstations, high-speed internet, printing facilities, and meeting rooms.
- Set up temporary pop-up shops or retail displays to showcase local artisan products, souvenirs, merchandise, or themed collections.
- Repurpose unused spaces into wellness and fitness areas, such as yoga studios, meditation rooms, fitness centers, or spa facilities.
- Utilize outdoor areas, gardens, courtyards, or rooftop spaces for cocktail bars, social events, music performances, sunset views, or unique dining experiences.
- Showcase art exhibitions, cultural displays, photography galleries, or rotating art installations to engage guests, support local artists, and enhance the hotel’s ambiance.
Being innovative can diversify revenue streams, enhance guest experiences, attract new clientele, and differentiate your hotel in the competitive hospitality market.
? ProTip:
? OTA SYNC’s Premium Banquet & Event management feature enables you to monetize on renting your property spaces.
It facilitates efficient coordination of tasks such as venue booking, scheduling, catering arrangements, and guest management.
The software includes features for tracking event details, managing reservations, and generating invoices to enhance organizational efficiency.
? Another Premium feature, SPA & Wellness management, boosts the operations of spas, wellness centers, and fitness facilities.
It allows you to monitor bookings for your SPA section of the property and have different views, either per SPA activity or the person in charge of it.
7. Control Food and Beverage
The food and beverage section is one of those areas where you can cut your operational costs immensely.
The hotel industry produces 79000 tons of food waste per year, resulting in the kitchen waste budget as high as 20%.
With that in mind, what are some of the ways to reduce costs?
✨ Monitor how much food and beverage your guests consume on average and consider reducing the portion size if the guests leave plates more full than empty.
✨ Create menus where you can use the same ingredients.
✨ Store ingredients properly so they don’t go to waste.
Wrapping It Up
With a bit more careful planning and analysis, it shouldn’t be too difficult to reduce hotel operating costs.
Nonetheless, managing all the aspects separately can be overwhelming, time-consuming, and error-prone.
Consequently, it could affect not only your finances but also the guest’s experience.
Luckily, hotel management software is a great saver that helps you run and automate all the operations from one place.
So, why not start with OTA SYNC?
OTA SYNC is all-in-one hotel management software that helps you:
? Streamline and automate your hotel’s everyday operations
? Maintain guest profiles, preferences, stay history, and feedback to personalize guest experiences and tailor services to individual needs.
? Implement guest loyalty programs, track guest feedback, automate guest communications, and enhance customer relationships for repeat business and guest retention.
? Automate inventory tracking, prevent stockouts, and control costs associated with supplies and assets.
? Instantly process payments in multiple currencies via our integrated payment gateway
? Get a comprehensive overview of your hotel’s financial health and performance metrics through advanced revenue, finance, and in-hotel reports.
Backed by the Booking Engine and Channel Manager, which increase your visibility and reach across OTA channels and your website, OTA SYNC is a powerful tool that caters to all the pre-, during-, and post-stay aspects of your business.
Ready to give OTA SYNC a go?
Try OTA SYNC for free and efficiently manage hotel operations while delivering exceptional services to your guests.
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Hotel Channel Manager System – Complete Guide
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