Industry Update
Opinion Article12 October 2020

Effective approaches to cut costs and boost productivity at your hotel

Long-term digitalization strategy

By Bogdan Romashko, Chief Marketing Officer at HotelFriend AG

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Оver the past years, the tourism sector has become vital for the success of many economies across the world. According to McKinsey, it made up 10% of global GDP in 2019 and was worth nearly $9 trillion. It is almost three times larger than agriculture.

However, the coronavirus pandemic has hit the industry harder than any other, and it is expected that there is no return to pre-crisis levels until 2024.

Now, people have both less income and fear of catching COVID-19 so they do not travel as often as they do before the pandemic. Most travelers decide to stay close to home and not to go long distances. This has created a lot of uncertainty for hospitality businesses. Hotels large and small are struggling to find the right balance between reducing costs and becoming more efficient just to stay afloat. For some, the way out of the crisis is to cut costs through compromising service, for others — to furlough or lay off staff members. Based on the Bureau of Labor Statistics, the hospitality and leisure sector lost more than 7.7 million jobs at the peak of the pandemic and 4.3 million remain out of work.

Yet, keeping costs low through compromising the quality of service and staff layoffs is a particularly slippery slope as they are the two cornerstones of the hospitality industry. Instead, we can embrace this challenge and try to find ways to reduce costs while increasing productivity and adapting to the new normal.

In this article, we'll cover effective approaches and strategies to save costs without sacrificing productivity growth, efficiency, and the quality of services.

Lean Management approach

By now, the Lean approach was not so popular in the hospitality sector as it was implemented mostly in the ambit of production. However, it is no longer subjected to single industries.

If we look at its definition, "Lean" means flexible, agile, or light. The approach includes a number of principles, methods, and actions for the effective and efficient configuration and examination of the whole supply chain. The goal of Lean Management is to create value without producing waste. Value is any action or process that a customer would pay for. And this is exactly what we need right now, in the time of crisis.

Besides, the Lean approach combined with Six Sigma became an important aspect within the hotel industry. Its major benefit is that it lowers the costs and helps attain higher effectiveness and improved operational efficiency thanks to eliminating waste from processes.

Let's dig deeper into wastes or inefficiencies in the hospitality and ways how to prevent them:

  • Motion

Today's vision is based on prioritizing all the tasks and reducing the time spent on routine and repetitive processes. Make a checklist of wasted physical efforts and unnecessary steps you might have in your hotel. Examples:

Wasted physical effort: Your guests still need to wait at the Front Desk to check-in.

--> Solution: You can fasten guest registration thanks to mobile check-in. Besides, you can improve service and boost sales thanks to the Concierge app.

Wasted physical effort: Your staff has to walk to get reservation documents from the printer at check-in, create and print invoices, etc.

--> Solution: The management in 63% of companies worldwide is still paper-based and time-consuming. With Billing and Invoicing Software, you can automate all routine accounting and paperwork of a hotel in a few clicks.

Wasted physical effort: Your housekeeping department has trolleys placed on every floor and positioned at a fixed point, constantly overloaded and unstable. The room is not cleaned before the guest arrives.

--> Solution: You can prevent overloading and other issues with housekeeping due to the optimization of the routes and improvement of work management. With the housekeeping feature, your team can view and control the department operations in real-time, streamline the performance of the cleaning staff, prioritize the tasks, and more. It helps improve both working conditions for the housekeeping staff and service to the customer.

  • Material flow and Layout

With material flow and layout planning, you will be able to design an internal inventory in an efficient manner. Plus, additional investments are avoided. Thanks to planning, you benefit from a clearly structured process when holding too much inventory reduced. For example, there is no need to stock up on plastic shampoo bottles or buy too much food in the restaurant. Also, you can replace physical objects with digital ones. Offer your guests digital keys instead of physical ones. In the restaurant, customers can order via digital menus and pay instantly. You don't have to print paper signages or invoices, as well as have multiple spare door keys and change them in case guests lose the one.

  • Organization and Staff

In terms of organization and staff interactions, miscommunications can be disastrous as they lead to poor employee relationships and a bad experience for guests. Hotelfriend communications module and Direct Chat keep staff and guests on the same page leading to fewer conflicts with each other. It also offers a sense of accountability and trust, which is key to long-term satisfaction at work.

  • Production Planning and Control

Your hotel has a nice design and a good location. And yet it is not enough. As a hotelier, you want your operations to be seamless and profitable. To reduce costs, you also need to tighten your processes and eliminate wasted effort, unnecessary tasks, which don't add value. With HotelFriend PMS, you will be able to concentrate on what is important now. Your employees will not waste time on redundant steps which can help save you money in the long term and deliver better quality service.

  • Quality

Service quality in the hotel is critical for building brand value and boosting customer loyalty. It also contributes to the increase in ROI, cost reduction, employee satisfaction, etc. Look for areas where items, data, or people move inefficiently from point A to point B. This may include delivering room keys to guests or stretching out in time the service orders fulfillment and invoicing.

How you see, it is much easier to cut costs by implementing automation and mobile services. Moreover, the digitalization in the hospitality industry is a trend, which is becoming a competitive factor in the COVID-19 crisis times.

Long-term digitalization strategy

Hotel occupancy drops, staff layoffs, new standards of cleanliness, and social distancing in the former "high-touch industry"... Unprecedented challenges are driving us to find new ways to cut costs, increase productivity, and rethink business models.

In this respect, digitalization that goes together with the "Smart Resilient Hotel" and "Smart Hotel Concept" can help you both manage the impact of the coronavirus crisis and achieve better results. These concepts include four strategic fields of action, which are as follows:

  • Smart Services
  • New Work
  • Digital Business
  • Smart Building

According to the study by Frau Prof. Bronkmann from Fraunhofer IAO, if hoteliers implement the concepts above, they can remove many issues from the workplace and employees' activities. As a result, this leads to more efficiency, precisely tailored use of resources (sustainability), and automation of standardized processes, as well as to lower costs.

In the digital age, the automation of hotel processes enables remote, mobile, and real-time management. What's more, governments support such initiatives and offer funds for this. For example, in Germany, you can apply for the "Digital Now" funding program which can help advance the digitization of the company and act in a future-oriented manner.

In addition, the Smart Resilient Hotel concept intertwines with another new trend that is a climate-neutral future, outlined in the European Green Deal. Based on the latter, hospitality and travel industries should integrate sustainability and new technologies into their business strategy and operations, and thus strive for zero waste. The example of Marriott hotels can show sustainability in action. The chain builds energy-efficient hotels and uses renewable energy. The hotels are working on the reduction of water use and waste. Also, the company offers its guests smart digital tools from checking-in to billing.

Final thoughts: the next great opportunity

The recovery from any crisis and coronavirus one in particular can take some time. However, if you take up the challenge, seize the opportunity to reimagine your operations, you will succeed for sure.

By implementing the approaches above and taking some actions, you will be able to achieve rapid and significant bottom-line results. In this respect, the HotelFriend Digitalization Package can help realign your hotel's operations in a better way that enables you to cut costs and thrive in the future.

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Bogdan Romashko

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    HotelFriend is a global provider of business software with offices across Europe. The company specializes in R&D in the travel and hospitality sectors, cloud computing, e-commerce, CRM, ERP, and the development of mobile and desktop apps.

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