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How to improve hotel operations to reduce operating costs

Every penny counts in today’s economic climate. Profitability can be affected by a small increase in revenue or a decrease in expenses. When a person decides to open a hotel, the costs of running a hotel start. The costs for an owner include the purchase of land, local clearances, and the obtaining of debt.

Even small savings in these areas can make a big difference to the overall project cost. Planning will help to control costs not only at the beginning of the project but also after it is completed. Here I will discuss how improving hotel operation can help reduce operating costs.

1. Intelligent Planning from the Inception Stage 

As I have mentioned, costs can add up from the beginning of a project. These include land, clearings, debt, consultants, and so on. A hotel with 100+ rooms can take around 24-36 months to become operational in India. The designing stage can save money, as well as the cost of the hotel once it is operational.

Each sq. ft. of a hotel is approximately INR 6000+. Each sq. ft. of hotel costs around INR 6600+. It is important to concentrate on revenue-generating areas. Intelligent area planning is essential for reducing multiple Food & Beverage outlets (F&B) that cannibalize one another’s sales, saving excess areas, and building innovative employee engagement areas.

2. Focus on Energy Conservation

Operating costs can be significantly reduced by energy conservation, which is 3% to 6% of total hotel operating costs. We can reduce inefficiencies and waste at the planning stage by focusing on energy conservation, low-power consumption equipment, and fixtures, as well as installing power consumption meters, area-wise. So that the HODs can be responsible for their respective areas. If you are looking for a Hotel Management Company in India then you can also connect with NILE Hospitality Top Hotel Management Company in India.

It is always a smart decision to invest in an efficient HVAC system. An HVAC system requires less energy to heat or cool a room.

3. Utilize Solar Energy

The second point is extended to say that the hotel industry can be energy-intensive. The availability of cheaper energy can reduce operational costs, which can increase the sustainability and competitiveness of hotels. Heating, light, and power (HLP) are the main energy costs for hotels. Hotels should consider solar energy as an environmentally-friendly option because it is cheaper than traditional energy sources. To reduce HLP costs, many hotels are switching to solar energy. Solar energy can be used to heat water and can also be converted via cells into electricity. Solar energy can be used to reduce operating costs.

4. Effective Human Resource Management

The hotel industry’s largest expense is HR. It accounts for approximately 50% of total operating costs. Hiring more staff can increase overall costs, make it difficult to manage, and impact profitability. Focus on 25% to 45% of total staff, and increase your business’s momentum. This will ensure that there are fewer workforce costs in the initial stages of the business and allow you to hire more employees as the company grows.

It is important to hire multi-skilled workers who are eager to climb the ladder of success based on their performance. Cross-skilling is key. You need to provide training for employees so they can perform different jobs. Both the hotel owner and employee will be benefited.

5. Back of the House Area Planning

Customers don’t see the back of the house. This area includes the kitchen, administrative office, and employee area. The kitchen is usually the largest area in this area. Employees use the employee area during breaks and to store their belongings. There are many customer service agents within the hotel so it is important to plan back-of-the-house areas.

It should be designed with staff engagement in mind. Employees can relax and collaborate with each other and create future plans. The cabins should not become a haven for executives who want to spend more time on operations or meeting guests.

6. Laundry Costs Reduced

You can encourage your guests to reuse their towels or linens by asking them if they prefer their linens and towels to be washed daily. This will save laundry costs and prolong the life of towels and linens. Many hotels have made this a green initiative. The American Hotel and Lodging Association estimates these types of programs could lower total laundry volume by an average of 17%.

Do you own a hotel and need advice on how to improve your hotel’s operations? Contact us to find out how we can assist you in Hotel Operations Management.

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