Hotels must keep operating costs down to remain competitive

by Stephen Beard, Head of SME Sales, Gazprom Energy UK

Managing a successful hotel has always been a challenge, with the marketplace becoming increasingly competitive. Now, with sites like Airbnb increasing in popularity, consumers have access to more options than ever before when choosing where to stay on their travels.

While alternative accommodation is by no means a new phenomenon – hostels, B&Bs, family stays and privately rented accommodation have existed for as just as long as hotels – there is no denying the impact that sites like Airbnb are starting to have on the industry. What a site like Airbnb does, is collates all of these pre-existing options and presents them to the consumer in an easy to digest format, meaning they are much more likely to opt for one.

It’s not all bad news though, as a study from Morgan Stanley found that the platform doesn’t actually pose as big of a threat to the hotel industry as was once thought. However, this doesn’t mean that hoteliers can rest on their laurels, as Airbnb will only continue to grow in popularity.

Recent research from Bank of America suggests that the main reason for people using Airbnb was that they believed it to be a cheaper alternative to traditional hotels. In order to remain competitive in an ever changing marketplace, hoteliers need to be able to keep operating costs to a minimum.

How can hotels reduce operating costs?

While there are certain areas that you will be unable to cut back on, there are others where small changes can have a big impact on your bottom line.

Become more energy efficient

Hotels are energy intensive businesses, ranking amongst the top five in terms of energy consumption in the tertiary building sector. In fact, the annual energy costs for the hospitality sector are in excess of £1.3 billion.

Improving your hotel’s energy efficiency is a great way to reduce operating costs, while also having a positive impact on the environment. For example, by turning the temperature in your hotel down by just 1˚C, you could reduce your annual heating bill by up to 8%.

Switching from standard lightbulbs to energy efficient LED bulbs is another great way to cut costs. While the bulbs themselves are more expensive, they can use up to 75% less energy and last up to 10 times longer, saving you a considerable amount of money in the long run.

Review your supplier relationships

Most hoteliers will rely on a number of different suppliers, some more than others. However, this is another area where savings can be made. Sometimes, instead of dealing with a number of different suppliers, you could actually consolidate all of your business into one, single supplier.

Alternatively, if you have been bringing regular business to the same supplier for a considerable amount of time, it is perfectly acceptable to inquire about changing the terms of your arrangement, to see if you could receive a better deal.

Reduce your administrative costs

Cutting administrative costs is another way to save money, and can also have a positive impact on your overall efficiency. For example, instead of constantly printing invoices or receipts, consider introducing e-billing, and start storing files electronically, rather than physically filing important documents.

By doing all of the above, hoteliers can successfully reduce their operating costs without compromising on service quality, allowing them to remain competitive in an increasingly changing marketplace.

Gazprom Energy’s Head of SME Sales, Stephen Beard, has cultivated an in-depth understanding of the wants and needs of small business customers during a diverse career spanning over 30 years. Specialising in sales and customer service, Stephen has worked within a range of large, complex, highly people-dependant and multi-sited operations, including the Chartered Trust, Parcelforce and Royal Mail. In October 2014, Stephen joined Gazprom Energy UK to focus on developing the SME market, which he does by balancing customer need with people, financial and performance management supported by a Balanced Scorecard approach.