The year 2019 marks a decade of growth in the US travel industry. Over the past ten years, the economy has been spurred on from emerging markets around the globe— enabling a surge in consumer and business travel felt throughout the hospitality industry.
Regardless of “when” or “if” a downturn materializes, hotel operators and managers can benefit from early planning. Here are six best practices from Avendra that you can put into play today to better prepare for whatever lies ahead:
Systematic Approach to Managing Spend
Don’t wait to put an ironclad plan in place. Be proactive with an always-on systematic approach to managing spend and margins. Now is the time to examine spend categories, supplier’s stability and upcoming contract renewals. Make sure your finance and procurement teams, as well as stakeholders in the business, are equipped with proper visibility and proactive insights into spend, suppliers and contract activity.
Whether labor is hard to find, or the economy is down, it’s important to find ways to use existing staff more efficiently rather than hire more people. Cross training staff is a good option. For example, restaurant workers who are comfortable being in front of customers can be trained to work the front desk during busy check-in times, or the kitchen can use one line cook to manage two stations, saving money, giving an employee more responsibility and ultimately increasing job satisfaction.
Consider Outsourcing Workers
We are also seeing a trend toward outsourcing back of house staff. This option eliminates insurance and management costs. Alternatively, you can also look to hire students or interns. Not only does it fill an immediate need at little to no cost, but it also teaches apprentices new skills. If people are “highly motivated,” have good attitudes and are willing to be trained, their eagerness to learn can outweigh their inexperience and offers a future labor source channel.
Evaluate Your Contracts
Now is a great time to look at the health of your existing contracts, especially if that contract is up for renewal. For instance, many of our suppliers in the service industry offer contracts with price caps to prevent large price increases. Elevator contracts for instance can offer extra discount options such as prepayment or extended terms to help lower pricing and many other service contracts have discounted, firm-fixed hourly rates. Your procurement partner can do the legwork for you and provide a better deal to give you some leverage. Use that leverage wisely and it could save you hundreds if not thousands of dollars per month.
Conduct an Amenities Expense Analysis
Now is also a really good time to take a hard look at your amenities spend. Some items you are buying are optional vs. brand mandated. Eliminating amenities altogether isn’t the answer, but your procurement service provider should work with you to recommend another amenity that fits your brand, segmentation and business model.
Avendra continually works with clients and suppliers on reformulating in-room products. Perhaps you can switch to a lower cost lotion or place the lotion in a smaller bottle to cut costs. Replenishing amenities “on demand” is also an option. Advise guests that if they need more of an item, all they have to do is “ask.”
Not only does a sustainability program help you go green, it can also save you considerable greenbacks that can go directly to your bottom line. As an example, for a minimal investment, you can buy programmable thermostats that prevent spending money heating or cooling hotel rooms when no one is in them. Or look to energy programs like our partner Zenith to provide hotels and resorts with an option to lock in energy costs based on their risk levels.
Closer scrutiny at energy efficiencies as well as sustainable processes can be impactful. For instance, it’s also important to analyze the profitability of your laundry operation. In cities where the minimum wage is exceeding $15 per hour, it may be cost-prohibitive to staff an on-site laundry.
Working with professional laundries that recapture and reuse water and power is a smart alternative. Not only is this good for the environment, but there is also a labor savings factor to consider – linen reuse means less labor. While the rooms still need to be cleaned, less time is spent collecting dirty linens, washing them and stocking them for future use. Furthermore, if your hotel has a linen or towel reuse program in place, make sure your housekeepers are adhering to the programs. If a guest rehung their used towel for reuse but the housekeeper mindlessly replaces it, the program is moot.