How to reduce hotel operating costs

How to reduce hotel operating costs

Taking into account the fact that hospitality is a sector with very strong competition, the task of every hotelier is to fully meet expectations and ensure guest satisfaction. Achieving the highest quality service can be a challenge to control operating costs.

Operating costs are costs that are related to the day-to-day operations and are a significant aspect of the income statement. The three key operating costs of running a hotel are:

  • Labor costs
  • Utility costs
  • Maintenance costs

Insight into operating costs gives managers a clearer picture if how much is spent on running a hotel.

Increasing profits is a management goal that can be realized through increasing revenues or reducing costs.

Rising operating costs affect the financial result, so cost management is important for long-term business. On the other hand, excessive reduction of these costs can reduce productivity and harm the financial result. Therefore, establishing a proactive approach to controlling operating costs is key to a hotel’s success, as optimizing these costs brings in higher revenues.

Below we guide you through ways to reduce them.

1. Employee management and training

Half of the operating costs are labor costs. It is important to anticipate the required number of employees to perform a specific job and their schedules, because an insufficient number of employees can result in greater dissatisfaction of both guests and employees.

In addition, investing in employee training increases the level of service quality and prevents downtime of operations that can cause higher costs. Hoteliers should train employees to perform various jobs, because in the absence of an employee, existing staff could take over the job without the additional cost of hiring new staff.

Reducing turnover reduces labor costs, so in addition to satisfied guests, it is important to have satisfied employees.

2. Reduction of utility and maintenance costs

Utility costs account for about 6% of operating costs. One way to reduce utility costs is to install LED lighting and use motion sensors, which are more energy efficient and durable.

A focus on environmental friendliness and sustainability, such as encouraging the reuse of towels, reduces these costs.

Breakdowns are a frequent occurrence in the hotel, and if guests report with such a problem, it will significantly reduce their satisfaction. That is why it is important to perform daily checks of failures, which will reduce maintenance costs and ensure guest satisfaction.

3. Software implementation

Automation is a great way to optimize operating costs and achieve efficiency.

Using the Property Management System – PMS allows you to clearly monitor your condition at the hotel at any time, collect information about guests, reservations.

The advantage is reflected in saving time and getting rid of administrative tasks, so that hoteliers can fully dedicate themselves to achieving guest satisfaction and performing major activities. By connecting Property Management System with the Channel Manager, it significantly contributes to business improvement.

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