Hotel operators know that there are countless incremental costs that add up to a lot of expenses. Industry executives discussed this topic at length at Hotel ROI Midwest conference, part of the Hotel ROI Series. Here are some of their insights on how reducing hotel costs.
Eliminate Dead Space | According to Chris Winterhalter, CEO and co-founder of Hotel Rehabs, one of the best ways to minimize costs is to do some research and put more thought into your property’s physical spaces. Well-designed hotels can realize a huge return on investment by utilizing small spaces correctly. Winterhalter says, “In New York City, restaurant tables are close together so that businesses can put every inch of space to work. Take that mentality into your market and you can gain a lot of value by repurposing things that aren’t making a lot of money.” One example is transforming excess storage space into guest rooms. Even with the new construction, the efficiency you create with each additional square foot translates to more revenue.
Throw Out Your Crystal Ball | Reducing hotel costs often comes down to planning and reacting. Jerry Cataldo, president and CEO of Hostmark Hospitality Group, believes trustworthy managers are critical. “Form response teams with partners you know you can work with to address issues as they come up while everyone else in the region is scrambling for solutions.” Cataldo continues, “A lot of what you do to be successful there happens prior to encountering a bad situation.”
Invest in Quality Labor | On average, labor is a hotel’s largest expense. Unfortunately, owners don’t always pay enough attention to the hiring process. Ravi Patel, president of Hawkeye Hotels, advises to owners to promote from within and emphasize company culture. Owners with fewer properties tend to be better at hiring and have a lower turnover because they are more involved.