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Top 10 Areas Where Hotels are Losing Money

Posted by Dawn Lampert on Oct 7, 2015 7:00:00 AM

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Is Your Hotel Losing Money in These Departments?

Vacant rooms are an obvious source of loss for a hotel, but what are other areas of operations that are causing hotels to lose money? From reducing utility and energy costs to marketing expenditures, managing a hotel is a costly endeavor. Keep reading to learn more about some of a hotel’s most common operating inefficiencies.

  1. Room service 

    Hotels around the world lose money on room service and some major hotel brands are even nixing the amenity altogether. Maintaining an arsenal of waiters, kitchen staff, and other service employees is expensive and occasionally unnecessary.  

  2. Inefficient lighting
    A hotel uses up a lot of energy, so why not make things as efficient as possible? The next time you need to switch out the light bulbs, give incandescent bulbs the boot and install LED lighting. LED bulbs are more efficient and last longer.

  3. Dirty HVAC equipment
    Properly maintaining your property’s HVAC (heating, ventilation, and air conditioning) system can equal substantial cost savings. By some estimates having your vents steam cleaned can result in a quick 6 month return on investment. Plus, rooms with well-functioning HVAC systems simply smell better.

  4. Uncovered pools and hot tubs
    Is your hotel’s hot tub covered at night? How about the pool? You likely spend a fair amount of energy keeping these amenities at the correct temperature, so don’t waste money by leaving them uncovered when not in use.

  5. Kitchen and laundry operation
    The kitchen and laundry areas can be some of the most energy-intensive areas in a hotel. Can you set your washing machines to a lower, yet still effective, temperature? Would staggering and/or coordinating meal times in the kitchen lead to lower energy use?

  6. Online travel agencies
    Online travel agencies, or OTAs, can be a great way to bring in more business. You should regularly check in on your OTA sales to see whether the commission you’re paying these agencies is worthwhile. Plus, these rooms are often sold to the customer at discounted rates, which can affect your bottom line even further.

  7. Marketing costs
    How much are you spending on marketing, and have your efforts been fruitful? In any business it’s easy to “set it and forget it” when it comes to marketing, but conduct regular marketing audits to be sure that you aren’t wasting money.

  8. Food and beverages
    If hotel guests are leaving the property to seek out other bars and restaurants, it could equal big losses for the food and beverage components of a hotel. You’ll still need to staff these areas, even if attendance and sales are low. Consider pricing drinks accordingly and offering up fresh and unique dining options — a tactic many hotels are using successfully.

  9. Vendor contracts
    Property Operation and Maintenance (POM) costs typically range from 4 to 6% of total property revenues. Take a look at your current vendor service agreements to see whether the contracts are more beneficial to you, or to the vendor, and consider renegotiating.  

  10. Employee retention
    Hiring and training new staff members is expensive, so aim to keep employee morale high to encourage retention. In the service industry satisfied and happy employees usually translate to satisfied and happy customers, which can only improve profits.

Topics: Hospitality

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Envysion is a leading provider of cloud-based video driven business intelligence that helps companies deliver on their brand promise. At Envysion, we marry operational, financial and employee metrics together with video and sophisticated analytics and make it easy-to-use and accessible, offering visibility into every store…every location…every day…from anywhere.

Dawn Lampert

Dawn Lampert

Account Director, Envysion

Dawn is responsible for helping Envysion’s enterprise clients in the retail and restaurant spaces determine which Envysion products and services will best meet their needs. Prior to Envysion, Dawn was with MegaPath and was responsible for selling complex Wide Area Network (WAN) solutions into retail and restaurants. Additionally, Dawn has delivered significant results for other start-ups such as Connect South LLC, Intrepid Communications and Advanced Radio Telecom. Dawn earned her Bachelor’s degree in Public Relations at Western Kentucky University.

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