How to Reduce Hotel Operating Costs with Technology?

FREE

Reduce Hotel Operational Cost with Technology

Blogs / Hotel Operation

How to Reduce Hotel Operating Costs with Technology?

30/08/2024

Harman

Hotels, like any other business, get affected by inflationary pressures, supply chain bottlenecks, as well as staff shortages, and energy costs/management.

The balance sheet does take a hit, at the end of the day. Thus, with sudden decreases in the value of money now and then and uncertainties around processes increasing, hotels need to optimize their operating costs in order to run and thrive. And this is possible through technology.

From reducing the hotel operational costs with technology and boosting operational efficiencies to improving customer experience, etc., digitalization facilitates it all.

In this blog, we will look at ways to reduce hotel operating costs with technology.

What are hotel operating costs?

Hotel operating costs are the everyday costs of running, maintaining, and growing a hotel business. These costs highlight the avenues of income generation as well as offer a comprehensive view of the financial health indicators.

These Hotel Operating costs are divided into two categories:

Fixed operating costs: These are the costs that are not impacted by sale volume changes and occupancy levels. Fixed cost, as the name suggests, is a static cost that may or may not change after a period, but certainly does not influence the day-to-day operations.

Some hotel fixed costs include:

Rent and mortgages
Property taxes and insurance costs
Salaries and other staff benefits
Fixed utility bills
Fixed equipment and software maintenance charges

2. Variable operating costs: These costs, as the name suggests, vary or fluctuate with sales and occupancy levels. As the business expands or contracts, these costs increase or decrease with it.

Some of the hotel variable costs are:

Utility costs
Ads and Marketing costs,
Floral arrangements
Housekeeping supplies
Hourly labour wages

These operating costs are an indispensable part of a hotel business. Thus, hotels need to optimize these costs for higher profitability and growth.

Let’s look at the role technology could play in optimization of the hotel operating costs.

Ways to reduce Hotel operating costs using technology

Automation of repetitive tasks, elevation of guest experience, digital marketing, etc., are some of the benefits of digitalization to hotels. While these are all qualitative aspects of a hotel business, their impact could be noted on the balance sheets.

Here are some ways in which technology could be used to practice cost control in hotel industry:

1. Direct bookings engine

Direct bookings always benefit businesses. It is one of the most effective cost-cutting strategies for hotels. Moreover, it allows hotels to personalize guests' experiences by offering the most suitable packages, offers, deals, and upsells.

Direct bookings allow hotels to save the commission given to online travel agencies (OTAs) as well as local and international agents. Through direct bookings hotels are able to increase revenue on room listings, as well as present a better brand image, strong enough to trust.

It allows guests to feel safe about their bookings, when done directly with the hotel, eliminating the intermediaries and the associated hassles.

CTA: Boost Hotel Direct Bookings with CreateWith

2. Digital or self-check-in/out

Digital check-in/outs through digital devices or through kiosks help hotels save time, costs as well as well and effort. Further, papers and other stationery are also saved, allowing hotels to practice sustainability.

Reduced front desk line and chaos means fewer menial tasks and last-minute requirements for overstaffing schedules. Digital check-in/out solutions are practical and allow hotels to cut down on the costs of additional labor requirements, especially during peak seasons.

3. Cloud-based property management systems (PMS)

PMS or property management system is a game-changer technology for any hotel. With the relevant system integrations, a hotel could manage its property seamlessly, whilst reducing costs.

From reservations, and inventory management, to housekeeping, all the tasks are automated, and data is shared in real-time for effortless operations. The entire property management is streamlined through the use of this single technology, saving costs, time, and effort with enhanced efficiency.

Moreover, investing in a cloud-based property management system further reduces the costs of on-premises hardware and maintenance services, and offers scalability and easy accessibility.

4. Channel Manager

Channel manager allows hotels to automate inventory management on the gazillion OTAs a hotel exists on. This management includes inventory updates, last-minute cancellations, and automatic relisting of rooms upon availability.

This helps hotels better manage their presence and operations on multiple channels, at the same time, and mitigate the risk of losses due to last-minute cancellations. Some PMS come with an in-built channel manager, while with others, hotels need to adopt a separate channel manager system.

Also Read: PMS vs. Channel Manager

5. Energy conservation and management systems

Energy management is one of the most effective cost-saving ideas for the hospitality industry. The everyday use of energy is quite high in a hotel. Not all guests are conscious of their energy consumption in their respective rooms. Thus, hotels need to adopt or install some systems that would manage the daily energy consumption hours. Smart room is one such digital solution.

There are systems that detect empty rooms and adjust the light and air conditioner settings accordingly. Smart rooms allow guests to manage their room temperature and ambiance with just a few clicks, improving their overall experience, as well as saving electricity costs.

6. Digital Marketing

Traditional marketing is expensive and laborious. Moreover, the digital age guests expect hotels to move with time and practice marketing that is easily visible and engageable. So, what’s better than digital marketing? These campaigns can be run on the most preferred guest channels, are easily consumable, and are just a click away from engagement.

Moreover, digital marketing channels allow hotels to target specific guest segments and save the costs spent on running general, untargeted traditional marketing ads. Smart CRM systems help hotels personalize messages and loyalty programs to offer guests exactly what would interest them.

The most used search engines could be leveraged to create brand visibility with SEO.

Further,AI chatbots respond to guest queries arising from marketing campaigns, increasing the chances of engagement and conversions.

CTA: Marketing for Hotels with eMark-IT

7. Staff training and retaining tools

The recruitment, and training of hotel staff costs hefty amounts to the hotels. Thus, hotels need to digitalize their traditional, mundane training systems and offer benefits that would incentivize staff to serve them for longer periods.

Retaining an experienced team helps the hotel enhance operations and reputation as well as save costs and efforts of recruitment and training freshers. Technology-powered training platforms and communication channels are fresh, engaging, and updated. They help the staff learn the latest trends and techniques and streamline inter-and intra-team communication.

The administrative costs come down with these platforms, and the hotel staff learns and grows with time and industry.

Conclusion

Thus, digitalization can help hotels reduce operational costs, increase efficiencies, and at the same time, elevate guest experience and engagement. Automated check-in/out, PMS and digital CRM systems, digital marketing tools, channel manager, direct booking engines, etc., are some ways hotels could reduce their operational costs with technology.

And not just the costs, these ways/platforms also ensure that hotels are able to make the best of multiple guest touch points and give several reasons for guests to revisit.