6 ways to lower hotel operational costs

6 Ways To Lower Hotel Operational Costs In 2022

Cutting down on operational costs could significantly boost your hotel’s bottom line. With prolonged, slow recovery from the COVID-19 pandemic, hospitality markets across the United States are getting more crowded than ever before. Simply put, at any given destination throughout the country, there are more hotel rooms and short-term rentals than ever before. Online price comparisons are easier than ever, and consumers are getting savvier by the moment. All of this is coming together to shrink hotel margins, and hotels are looking for ways to counteract that revenue loss.

Based on discussions with our hotel clients. here are a few areas we’ve identified to help cut your operational costs while staying competitive and maintaining a world-class customer experience.

  1. Leverage Technology to Reduce Front Desk Labor

Along with health and sanitation concerns, the COVID-19 pandemic has been accompanied by an ongoing, significant labor shortage across the hospitality industry. In efforts to combat this shortage, many hotels have adopted self-service check-in and check-out options. According to a recent report on technology use related to operations and guest experience by New York University, contactless check-in and check-out services have increased by 66% since the beginning of the pandemic.

Respondents were asked which technologies have helped them reduce front desk labor while sustaining a quality guest experience. 45% of hoteliers reported success with self-service check-ins, and 31.8% said that mobile keys helped reduce the need for front desk staff. 

6 Ways to Cut Hotel Operational Costs in 2022

  1. Cross-Train Staff to Take on Multiple Roles

Another method to drive efficiency at the front desk is cross-training. Cross-training allows the hotel to leverage staff members to temporarily assist in other areas during peak check-in/out times, without adding more staff and overhead. If the entire housekeeping staff is busy, someone from another department can step in to assist with guest request fulfillment. As stated in this Forbes article, cross-training gives you (among other things):

  • More staffing flexibility
  • A trained sub in case you lose a key employee
  • A way to prepare employees for an upward move in the organization
  • Employees that have a better understanding of the big picture
  1. Cut Down on Operational Costs and Waste with Digital Keys

Making the switch to Digital Keys has multiple benefits for hotels, especially when reducing operational costs for your bottom line. As far back as 2014, Hotel Online reported that 73% of guests would prefer to skip the front desk. 60% of guests were more likely to choose a hotel that allowed them to check in and open their door with their phone. In the six years since that report, guests have grown even more tech savvy. In addition to residual health and safety concerns from the pandemic, people are typically more comfortable with contactless check-in when possible.

On average, a 200-room hotel will go through an estimated 12,000 keycards every year. Roughly, 1,300 tons (2.6 million pounds) of plastic waste annually. Between guests’ willingness to adopt Digital Key technology and the sheer amount of waste that comes with plastic keycards, it’s become clear. Physical keys are an unnecessary expense that should likely be abandoned in favor of more cost-effective, environmentally friendly digital options.

Further, according to New York University, “With the rise of technology in contactless guest experiences, nearly 75% of respondents believe that contactless will become a long-term trend.” When you add these forecasts to the massive amount of plastic waste that hotel keys generate, keyless options make even more sense.

6 Ways to Cut Hotel Operational Costs in 2022

  1. Increase Efficiency with Optimized Resource Consumption and Improved Automation

Making more eco-friendly decisions can also help hotels save on consumable resources and labor, as well. A couple of examples of low-hanging fruit in this area are towel reuse policies and smart thermostats in guest rooms.

Simply placing small signs in your guest room bathrooms encouraging guests to reuse towels can go a long way. Further, The American Hotel and Lodging Association estimates that the request reduces the number of loads of laundry washed – as well as the related water, sewer, energy and labor costs – by 17%.

Likewise, smart thermostats with occupancy sensors will automatically increase or decrease the temperature in a vacant room by five degrees. In fact, The U.S. Department of Energy has estimated that hotels can save as much as 20% on their power bills each month by switching to smart thermostats.

Other considerations that can reduce consumption and cut operational costs might include:

  • Going paperless whenever possible (e.g., offering to email guest folios instead of printing them)
  • Installing solar panels
  • Replacing old showerheads and toilets with modern water-saving fixtures
  • Implementing recycling programs
  • Replacing bulbs with energy-efficient LED lighting
  1. Streamline Operations and Maintenance

When it comes to saving on energy bills, repairs, and staffing costs, it’s imperative that your hotel stays on top of preventative maintenance. For example, failing to replace an air filter after four months can reduce HVAC efficiency by 10%, according to Hotel Effectiveness. For a large property, that reduction in efficiency can add up very quickly. For maximum efficiency and minimum costs, you’ll need to partner with a reliable vendor who will keep up with regular maintenance and upgrades. When choosing the right vendor, cost is always a factor, but remember that poor maintenance will cost you much more in the long term. Consider reputation, years in business, and current certifications before you make your final decision. And, as you compare vendors, ask if any of your candidates offer special rates for long-term agreements. This will help lock you in at a reasonable rate, while providing stability for your hotel and trust in your maintenance partner.

  1. Update Your Hotel’s Overall Staffing Strategies

According to Hotel Management.net, total labor costs are the largest single hotel operating expense in the hospitality industry. With salaries, wages, service charges, contract labor, bonuses, and other payroll-related expenses – in a 24/7/365 business – it’s no surprise. And yet, many hoteliers aren’t making strategic decisions in this critical area.

For example, if you’re willing to train people, you can improve your bottom line by hiring inexperienced, intelligent, and ambitious people when appropriate. This strategy helps young, ambitious workers get their foot in the door in their chosen industry, and it helps you save on operational costs while providing opportunities.

Likewise, offering more amenities and features – restaurants, spa services, gift shops, etc. – may be a great idea, but operating and maintaining them can be unnecessarily costly. This is another area where you may benefit from partnering with third-party vendors. Bizfluent.com suggests that hotels consider contract concession operators to manage and run those extras. That way, your guests enjoy top-notch amenities, you receive regular commissions from your partnering company, and you can avoid the expenses and hassles that come with expanded services.

With the tips and insights we’ve provided here, you should have a clearer idea of areas where your hotel may be able to cut costs while improving operations and delivering a stellar guest experience this year. Try one or more of these cost-saving ideas and let us know how it goes!

Want to learn more about how Digital Keys can help improve guest services and increase your bottom line? OpenKey is the leading provider of digital key services. Schedule a demo today to see how you can do more for your guests with Digital Keys.

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