Two things determine the success of hotels: Profitability and Guest Satisfaction. But is it possible to have one without sacrificing the other? Today, we’re going to look at reducing operating costs to increase profitability and improve guest satisfaction.
There are two key metrics to look out for when considering reducing your hotel’s operating costs.
First is the hotel’s operating expenses per room (number of rooms / total expenses).
The second is the hotel’s operating expense ratio (operating costs versus revenue generated).
Keeping these two metrics as low as possible will ensure maximum profit per room. But can it be done? And if so, how can this be done?
Let’s take a look at how successful hoteliers use their overall financial capabilities and their property management systems to get closer to optimal results.
Schedule Workers According to Booking Volume
One area that requires continuous improvement is the optimal work schedule for staff. Workers are often the most expensive operating expense a hotelier has, and smart scheduling is key to keeping those costs consistent.
Start by forecasting the schedule to utilize your employees fully, but don’t let them get ragged and overlook things. Use historical data to predict high and low usage periods and adjust your schedule accordingly.
Schedules for hourly staff should never be fixed but should allow variation in the types or number of bookings. In a study by Deloitte, they found that, on average, overspending on payroll can account for 50-60% of a company’s operating budget.
Set Specific MPR Standards for Specific Room Types
Setting standards for MPR (minutes per room) of housekeeping staff is not a new concept for hoteliers. But not all rooms are the same.
Stay-in rooms do not require as much housekeeping time as check-out rooms, and luxury suites require longer cleaning times than standard rooms.
Note how much time each housekeeper spends cleaning each room. How does this compare to your current standards? Now adjust your hotel’s MPR standards for each specific room type.
By adjusting the MPR standards by room type, you can reduce costs and address any inefficiency issues. According to Hotel Effectiveness, one test hotel implemented the MPR standards set for each room type and reduced housekeeping costs by more than 7%.
Cross Train Your Staff
The cost of cross-training is easily outweighed by the benefits you will see. Not only can cross-training help you with workforce management during times of heavy workloads, but it can also keep you covered when you get a call or schedule a vacation.
And, when one department is down, those employees can be used in another, so there is no unproductive time. Adequate coverage will not be an issue if vacations are scheduled. Staff who can multitask can also enhance the guest experience and improve your guest service rating.
Your guests will be better served if staff can fill in at the front desk during peak check-in time or assist housekeeping staff with early cleaning, so their experience will be remembered well.
Cross-training for similar jobs is easier for employees, and they are generally easier to adapt. For example, the restaurant hostess might have easy access to front desk check-ins, while someone working in the back of the house might be more likely to be in a position that doesn’t face guests.
Work with your team to make the best use of cross-training opportunities.
Watch Your Expenses
Review your expenses and tick off any services or products you no longer use. Then decide why you are no longer using it, discontinue it, or look for comparable services or better prices.
If you’ve been paying for a service for a while, it’s easy to get self-satisfied with the charges. However, taking the time to do a comparison analysis can save you a lot and help to reduce your current costs.
Check your staff overtime payroll costs. For example, if you have scheduled your staff and cross-trained them, but you still have overtime costs, then analyze why this is happening and correct it.
Embrace Technology
Not surprisingly, technology is the second most important priority behind the growth of CEOs worldwide.
87% of CIOs believe that digital empowerment of their workforce can generate at least 5% additional revenue growth over three years.
The technology is faster and more accurate than manual systems. Plus, there are dozens of online systems and software programs that simplify functionality and keep your property running smoothly and effortlessly.
Employees who work for hotels report 17% less time spent on manual processes, 16% more team collaboration, and 16% faster decision-making.
A high-quality hotel property management system can lower your operating expenses and increase employee productivity.
Contact us for Aatithya Hotel Software to find out how we can help you cut operating expenses, capitalize on revenue opportunities and reduce overall business expenses.
Get a personalized demo today.
Or Contact us at +91-9415406114 or write to us at suniljain@datamannet.com
