Technology is changing the landscape of small business ownership including the hospitality business. Businesses are using technology to cut costs, improve efficiency, and send profits to new heights. But for some business owners, there’s one big problem with going high-tech: the cost.
This is especially true in the hospitality industry where margins are razor thin. However, when hoteliers do increase their profits, it’s by cutting operating expenses — and often, investing in technology is the best way to accomplish it.
How to Pay for Tech Upgrades
You know you have to spend money to make money, but what if you don’t have money?
It’s not unusual for a small hospitality business to lack the capital for a major improvement, but that shouldn’t hold you back from growing. The key is to calculate the ROI of your investment to ensure it will pay off, then use your plan to secure outside funding. Established businesses have a few options for where to seek outside funding, including SBA loans, business lines of credit, and invoice or equipment financing. Each option has its pros and cons, so do some research before talking to lenders.
Growing Hospitality Profits with Tech Investments
Slowed revenue growth in the hospitality industry has made it more important than ever to keep operating expenses under control. For many hoteliers, that means taking a close look at labor and utilities, two of their largest overhead costs.
Smart thermostats with occupancy sensors are a clear pick for cutting heating and cooling costs. By adjusting room temperatures while vacant, hotels can save 12-24 percent in heating and cooling.
Keyless entry and mobile self-serve check-in are increasingly popular with hotel guests. They also have big potential to shrink costs. Not only can hotels save money on key cards, they also slash front desk staffing needs. With less time spent checking in guests, staff can focus on delivering the elevated guest experience that lets the hotel charge profitable rates.
As hotels eliminate room service and mini-bars — an obvious cost saver as usage of in-room food services sinks ever lower — a new opportunity to deliver high-quality, hyperlocal meals has emerged. Instead of preparing food in-house (and maintaining a 24/7 kitchen to do so), hotels can partner with food delivery services like UberEATS, Grubhub, and DoorDash to expand their dining options while simultaneously encouraging customer loyalty. Rather than ordering through food delivery apps directly, guests can use the hotel’s mobile app to order free delivery and accrue hotel points.
Can Technology Increase Hotel Revenue?
The right tech can even add revenue streams to a hospitality business. For example, a hotel can use dropshipping for its online store to print branded t-shirts, mugs, and hats, and have them delivered directly to customers when an order is placed. This eliminates the need to store physical inventory or hire staff to pack and ship orders. With minimal upfront investment, dropshipping is a low-risk way to test the waters with hotel merchandise.
Another non-room revenue source for hotels is public meeting spaces. Building a tech-enabled meeting space with access to on-site catering enables hotels to engage the community and generate more revenue without necessarily putting more heads in beds. With a rise in startups operating without physical headquarters, there’s a growing need for professional, high-tech meeting spaces to rent, and hotels with event spaces are uniquely situated to meet it.
As you can see, there’s no shortage of options for high-tech hotel improvements. However, just because these ideas work for some hospitality businesses doesn’t mean they work everywhere. Before investing in technology, know how it’s going to benefit your business and where it fits into the overall picture of your business’s growth.
By: Gloria Martinez