Want to improve the hotel’s bottom line? 5 Proven Tips including using Hotel PMS System

 

The bottom line, The ROI (Return on Investment), The Profit margins! Not just in hospitality, the bottom line matters for every business. At the end of the day, we are working for the money, right?

When it comes to a hotel, the main thing about achieving high profits is keeping hotel operating expenses under control. High costs and wasteful practices are hurting your hotel’s margins which can easily be avoided with technology tools such as hotel software systems, smart energy systems and more. On the other hand, it’s essential to have reasonable cost control to maximize profit.

Speaking of expenses, a hotel has two types of operating costs: Fixed and variable.

Fixed costs are those which you cannot avoid no matter how much business the hotel does. Examples include taxes, insurance premiums, rent, employee salaries, and more, which will remain unchanged regardless of occupancy, sales volume or revenue generated. This does not mean that you can’t reduce fixed costs; the changes aren’t proportional to the volume.

When running a hotel, the main cost to consider is the variable costs. These costs are paid in direct proportion to usage and must be paid regardless of revenue—for example, water bill and gas bill, travel agent commissions, housekeeping supplies and more. Variable costs change depending on how many rooms you sell, while fixed costs stay the same regardless of occupancy.

So, how can you reduce these costs and increase profits? Here are 5 ways to improve your hotel’s bottom line

1. Optimize labor costs by adequate scheduling and cross-training your staff
Labor costs make up a substantial percentage of a hotel’s operational expenses, accounting for about half of all expenditures on average. Personnel is a logical area to search for cost-cutting opportunities, but solutions need innovative thinking and a careful balance. After all course, you don’t want your employees to be overworked, but you also don’t want to be caught short-staffed with unhappy customers and nervous employees.
Hotels can reduce labor costs by optimizing labor scheduling and training employees. First, hotels need to optimize labor scheduling. Hotels may adjust the staff schedule constantly at different times of day or night depending on the occupancy rate, room rate, seasonality, etc. They must base their staffing decisions on data and analysis instead of gut feelings.

Second, hotels should train their employees regularly to improve performance and efficiency. Training can cover all aspects of hotel operations such as operation procedures, safety rules and regulations, selling techniques and customer service skills. Employees must keep updating. Cross-trained employees can cover for another employee on vacation or during a staffing emergency (such as an unexpected sick day). They can pitch in during a surge in their secondary function or when there is a downtime in their core responsibility. According to a study at the Univerhotelsity of Applied Sciences, cross-training staff employees in skills they enjoy is preferable to teaching them just one extra duty. A waiter who likes their job, for example, would prefer cross-training in another customer-facing position, such as host, over groundskeeping.

2. Reduce energy usage
When hotels have a high occupancy rate, they also have a high energy usage rate to keep their buildings well-lit and warm for guests. Many hotels, however, are unaware of how this impacts their bottom line. Hotels spend roughly 6% of their operational expenditures on energy each year, according to research. That’s not all; according to the same study, lighting accounts for roughly 35% of all power utilized in a hotel.

There are several ways to reduce hotel energy usage. The easiest is to install motion detectors in hallways, stairwells and elevators. Motion detectors will turn off lights in these areas when they are not needed. Another way hotels can save money on electricity is by using thermal curtains in the rooms. These curtains look just like regular ones, but they keep rooms warmer in the winter and cooler in the summer, saving lots of energy compared to traditional curtains.

Few other things you can consider when you optimize energy

● Using compact fluorescent or LED lights instead of incandescent bulbs
● Switch off any electrical equipment in any rooms that are not in use.
● Install timers on bathroom heat lights.
● Use solar-powered heaters for pools.
● Encourage guests to reuse their towels to cut down on washing loads.

3. Keep up your maintenance game.
Hotel maintenance is a huge cost for every hotel, and it’s something that can be difficult to control. When you’re managing a hotel, the last thing you want to do is cut corners when it comes to maintenance. You need your hotel to run smoothly if you want guests to come back time after time. That is why it is critical to keep a close watch on unforeseen costs before they occur.

Creating a maintenance schedule is the best method to achieve this. In addition, make sure that all inspections are comprehensive so that no cracks or flaws are missed. Also, don’t limit this to just rooms and common areas; assign maintenance responsibilities to each department. “Prevention is always better than cure,” as the adage goes.

4.Limit your marketing costs
Hoteliers are always thinking of ways to reduce their marketing expenditure while still increasing occupancy rates. The thing is that they don’t need to increase occupancy; they just need to reduce costs. The two best ways are to limit marketing costs are to get direct bookings and organic social media.

You can boost direct bookings by optimizing your hotel’s website for search engine traffic AKA, search engine optimization (SEO) or through online advertisements such as Google Ads (which still brings in more revenue than an equivalent OTA booking). Use Google Analytics and other tools to track your site’s performance and search engine rankings.

You can also reduce their marketing expenditure by relying on social media as a promotional tool. Social media is an excellent platform for hotels to interact with their potential and existing customers, but you need to do it properly. You also need to know how to make the most of social media campaigns and what content works best with your target audience. This will ensure that you reach the right audience without spending too much money and converting it into profits.

5. Bet on technology that streamlines operations

While the success of a hotel depends on many factors, technology has become increasingly important. Technology has made all aspects of running a hotel smoother and more efficient, and it can also help reduce costs. This is especially true when it comes to cloud-based Hotel PMS Systems.

Cloud-based hotel management software can help you save money by consolidating your services such as channel manager, revenue manager and more into one platform. It is a powerful tool designed to help hotels run more efficiently and profitably by automating various processes and reducing human errors. It reduces costs as you pay less in maintenance, electricity, inventory, eliminating the need for a separate server and much more. Using cloud Hotel PMS also enables hotels to take advantage of other business benefits like instant upgrades, real-time inventory updates and automated room rates. When a hotel uses cloud-based hotel management software instead of paper documents, employees become more efficient and eliminate the need for additional staff.

Regardless of how vital cost optimization is, you should not do it by compromising on the quality of your service. Negative reviews will hurt your hotel business if your customer service falls short of a guest’s expectations. As you consider these approaches, keep a sense of balance in mind. You can simplify your hotel operations and increase revenues with a bit of innovation and creativity.