Hotels use various cost-cutting strategies to increase their profit margins. These include identifying and eliminating wasteful practices or services that don't generate enough revenue to warrant the expense, energy conservation, outsourcing some operations and installing technology to improve efficiency.
Electrical costs are a major expense for many hotels. Simple changes can result in significant savings over time. For example, by replacing incandescent bulbs with light-emitting diode or fluorescent lights, the hotel will cut power usage dramatically for each bulb. In addition, sensors can be placed in key locations throughout the property to ensure that lights are only on when in use. Guestroom bathrooms, supply closets, swimming pools and hot tubs are some of the areas where these sensors can save money and cut waste.
Operating and maintaining extra amenities and features can be unnecessarily costly. To offset the expense of hiring staff, purchasing equipment and keeping inventory, many properties opt to contract concession operators to manage and run add-ons, such as restaurants, gift shops, spa services and valet parking garages. The hotel is paid a monthly fee by the partner company and is left without the hassle of running anything extra. These concessions often attract guests who prefer a property that has more to offer.
Key Card Switch
A hotel can install a key card switch in each guest room to cut power usage. Key card switches prevent any electrical item from working without a valid key card in place. This means the guests must be present when the power is on so the lights, air conditioner and TV don't run all day with no one in the room. This system costs a lot to install, but the savings it provides are often immediately noticeable.
A hotel can downgrade from a full service to a limited service hotel. This eliminates all but the most essential employees and wasteful amenities. For example, closing the pool eliminates upkeep costs, lowers insurance and can take personnel off the payroll. Doing away with a concierge and providing the front desk staff with some additional training erases one salary from the books. Less is often more in the hospitality industry and if the hotel's market position is good, these changes can actually help drive sales by lowering prices for the consumer.
- Check-in, Check-out: Managing Hotel Operations; Vallen, G.K., & Vallen, J.J
- Green Lodging News: 11 Green Hotel Projects Proven to Save Money
- Boston Green Tourism: How Hotels Save Money and Attract Businesses by Going Green
- QSR Magazine: 10 Ways to Save, Ideas for Saving Thousands in Operating Costs
Robert Morello has an extensive travel, marketing and business background. He graduated with a Bachelor of Arts from Columbia University in 2002 and has worked in travel as a guide, corporate senior marketing and product manager and travel consultant/expert. Morello is a professional writer and adjunct professor of travel and tourism.