Efficient operations in hotels are dependent on how well do you manage your expenses. Along with regular auditing and developing strategies to increase revenue, cost saving ideas for hotels are an important parameter for a successful business.
Cost cutting in hotels is advantageous to maintain optimum expenses and not spend on unnecessary things. At the same time, it is beneficial in earning maximum ROI and improving operational efficiency for your hotel.
I am sure, you as a hotelier must have been focusing on this aspect regularly (or at least, you must be doing it every once in a while).
And finding ways to cut off hotel costs is a true challenge, especially at locations where the cost of living is high. So, here I’ve mentioned 9 simple and straightforward ways to do so.
But before we go ahead with those ways, you should know and be sure of the reasons behind the cost cutting you do at your property.
Why should hotels cut costs?
When we think about it, you’ll find many practical benefits of reducing your hotel expenses. But it all comes down to a few reasons, which are as follows:
To keep expenses under control: Introducing the cost cutting element in your hotel business is important to keep a check on the explosion of expenses. It is a human tendency to spend more given a free hand; which is critical to control.
To increase profit: Since cost cutting lets you reduce your unwanted expenses, you can focus on desired profit target. Period.
And besides, if you see a transparent picture of your hotel expenses, it will immediately give you some ideas on areas where you can cut back on costs.
So, without delaying it further, let’s dig into the some guaranteed and most effective (at least I think so) techniques to save costs in your hotel business.
These are some general cost saving ideas for hotels. All may not apply, or more than these might also apply.
Let’s go through them one by one.
1. Analyse your expenses in detail
This is the first step towards cutting costs at your hotel. First things first, take some time to sit down and know where your expenses are going.
Hotel management software are a great help in generating reports for your expenses.
In a busy schedule of entertaining guests and managing other operations, you might be surprised at the expenses incurred.
There might be an unusual spike in bandwidth usage, non required expenses on cosmetics and linen. Similarly, observe your expenditure on inventory that could have been a lot cheaper if you analysed them.
Make it a habit to analyse your expense reports regularly. Get a hotel operating cost breakdown and try to spot some trends. Small details matter a lot when it comes to cost cutting and running a hotel more efficiently.
Taking account of small things is an effective cost control technique in hotel.
2. Cross train staff for optimum resource utilization
Well, hiring staff at your hotel takes up one a large segment of your efforts, time and expenses.
Factually speaking, a big chunk of your hotel cost is towards the labour, almost 50%.
That being said, cross training your staff for multiple roles is a good cost saving idea for your hotel. That way, instead of bringing in new faces for new roles, you’ll be able to use the existing staff.
Learning new skills is a win-win situation for you as well as the staff. They can gain an extra skill that will help them in the long run in the hotel industry. And you’ll be able to cut down the cost by not hiring a new employee.
For example, employees can help the front desk during peak hours/months to manage walk in guests, requests and complaints from in house guests. Similarly, when there is not much rush, front desk people can help the marketing team in social media marketing and reaching out to probable guests.
A caution here is to take care that you do not overburden the staff. This will result in demoralization and will make them ineffective.
3. Use technology to cut costs
The hotel industry is advancing with change in time and so are the guest’s habits and expectations from the hotels.
However, I’ve seen hotels not investing in technology because they fear insufficient ROI. And a usual misconception revolves around using hotel technology, stating that it poses as a burden and an additional expense.
Let me break that misconception today.
Using new technology does not necessarily mean increase in operational costs. Rather, these advancements can help in cost cutting.
Technology can save hotel expenses by automating operations.
All-in-one (integrated) hotel technology which includes hotel software, booking engine and channel manager automate and streamline a hotel’s all operations. These systems take care of bookings, inventory distribution, check-in ‘n check-out, billing, online reviews, housekeeping and everything else.
This reduces the need of a dedicated resource behind several operations, and even saves time.
In fact, a recent report by Hospitality Technology revealed that:
57% of hotels plan to spend more on technology so that they can provide services through advanced software and tools.
In addition to this, it is said that the Internet of Things (IoT) is also going to help in reducing hotel expenses. Read our blog on the impact of IoT in hospitality industry to know more smart ways of using technology in your hotel.
4. Deploy self check-in kiosks
The hospitality industry is rapidly evolving and it has moved from self bookings to self check-ins.
So, installing a self check in kiosk is a great way to cut cost at hotels.
Though a kiosk cannot completely replace the reception desk but it can cut the labor cost to a great extent, particularly those in the night shift who are a costly resource.
It can also reduce dependence on manual labor as guests find it easy and convenient to perform self check in.
A recent study found that 68% of guests want to speed up the check-in process using their smartphones.
Using appliances which consume more electricity and printing unnecessary papers not only increases your hotel running cost, but also hampers your cost cutting strategies.
Going green is an important step towards cutting cost and saving the environment as well.
Additionally, one of the most fruitful cost saving ideas for hotels is reducing electricity costs. This falls in line with the “Going Green” initiative as well. Here’s how you can reduce your electricity costs:
Use LED lights: For example, using LED bulbs can be more efficient and cost saving than using the normal incandescent bulbs. This saves energy and in turn reduces the electricity bill.
Implement smart windows: Windows that automatically adjust their tint all through the day are the smartest thing to embrace. These windows control how much light is passing through them, adjust cooling or heating in the room as required. This eventually saves cost of air conditioners cooling the room.
Use energy star appliances: Use certified appliances instead of the old appliances that consume more electricity. Doing so with one appliance won’t make a difference, but slowly replace all equipments to see a reduced electricity bill.
Controlling the lighting, using optimized room and water temperature, educating staff towards energy saving are some of the preliminary steps that can be taken towards going green and cost cutting.
Marketing needs research and getting into a marketing campaign without knowing the facts can definitely trouble your expenses.
Just throwing money without knowing the ROI is an inefficient way to market your hotel. There can be low cost ways to make customers aware of your hotel. You can consider the following ways:
Great content always sells. Invest in writing good content that speaks for itself.
Social media is the digital marketing weapon that should be used to reach maximum audience. Be active there. It will leave a thought in guests’ minds and makes them visit your hotel once. (Here are some best hotel social media marketing strategies you can adopt)
Tie up with local vendors to share/generate bookings
You can also take brilliant photos of your hotel and show them off to your target audience.
You should constantly analyse the results of your marketing strategies, 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.
If you need to rethink on your marketing strategies, or need to find more ideas to apply, here are some tried and tested hotel digital marketing strategies to help you grow your hotel business.
7. Practice preventive maintenance for appliances
Maintenance of systems, fixtures, facilities such as plumbing, AC, lighting and the infrastructure can be quite a costly affair. Preventive maintenance involves inspecting these facilities to prevent unexpected breakdowns.
This works as one of the powerful cost saving ideas for hotels.
An effective preventive maintenance method takes into account all the infrastructural specifics of your hotel and plans the annual maintenance schedule in a way that doesn’t interfere with the guests’ experience.
In addition, there are different hotel maintenance softwares that can automate maintenance scheduling for the equipments. They also help managers keep a tab of all the schedules to avoid unnecessary repairs.
Timely and well planned maintenance and repair is cost effective. Lack of the same can result in high penalty costs that disturb your operating budgets.
There are breakdowns that need repair immediately and the cost cannot be cut down here. But if you follow a regular maintenance schedule and get equipments checked from time to time, there will be less chances of a sudden failure or breakdown.
Thus, preventive maintenance helps reduce cost by keeping equipments intact for a longer time.
8. Use your hotel’s less utilized spaces
Look into every nook and corner of your hotel to find spaces that are not utilized or not used often.
Ideally, cutting operational cost and generating revenue go hand in hand.
Using underutilized spaces for a revenue purpose is a good way to earn a side income. There might not necessarily be a permanent set up for the same. So, this works as a revenue generation strategy as well as a perfectly practical cost saving idea for hotels.
For example; you could use your garden for weddings, parties or events. Deliver a great experience to the guests who attend these events and they could turn into your future guests too.
If you have a hall; use it for a yoga class or a dance class. This way, the guests will also spend a little extra money in your hotel than you expected; thus increasing your revenue.
An upcoming trend is to use your hotel lobby as a workspace, a social hotspot, a coffee shop or any flexible space that can be used for almost everything.
Setting up such a lobby will add a lot of value to your property along with the side income that you will earn. There can be other ways to use these spaces and promote your hotel during the off season. You can find some hotel promotion ideas to use these techniques and generate revenue.
9. Negotiate with vendors
Negotiating the right deal with your suppliers doesn’t necessarily mean getting what you want at the cheapest possible price. A negotiation is done right only when both parties feel happy and comfortable with the agreement.
While setting up your hotel, you take the best deals from your suppliers and vendors. After that, as the contracts come close to a renewal date and you know the expenses involved, you might have to crunch the expenditure a little.
It will be reasonable to ask for a discount when you are renewing contracts. You can also get quotes from other vendors to pick up the best one in terms of quality and cost both.
Before closing on a vendor, know the optimum cost of what you are investing in.
For example; if you are ordering cosmetics or other supplies in bulk, you might want to look for a vendor who gives you a good discount. Or, if you are investing in a complex software, you could negotiate with the dealer for a free training as a part of the deal.
These cost cutting techniques may or may not be suitable for all types of hotels. You are advised to use their discretion while adopting these cost saving ideas for hotels.
There are a lot of advantages that your hotel and staff will experience if you implement these cost saving ideas properly. You can increase pay for employees, purchase better equipments, invest more towards successful marketing and plan the year well ahead.
The hotel industry is highly competitive and the cost of running a business is always rising. But there can always be ways to keep the expenses low and run the hotel methodically. Look for solutions that fit best in your hotel and cut down the cost and increase revenue at the same time.
Mention in the comment section below if you know of more ways to cut costs or if any of these ways has worked for you.