From A Baker’s Dozen of Strategies to Make Your Hotel More Profitable Now| Tip #5 Monitor and Control Operational Costs -Focus on Your Top 5.

Monitor and Control Operational Costs -Focus on Your Top 5.

Payroll and utilities are almost always the highest single areas and they are addressed in Strategies #6, 7 and 11.

There are a number of ways to address costs, but it first requires identifying the largest categories and suppliers.

  1. Using your income statement and the detail work accompanying it, find the top 5 operational costs you spend the most money on each month. It could vary over time and you need to analyze at least three months to understand the overall situation.
  2. Operational costs include paper goods, certain amenities, food items (even if you are a rooms only hotel offering complimentary breakfast), a certain line item in linens, office or department supplies, etc.
  3. Once you have identified them, the assignment is to research ways to reduce costs on each one of them.
  4. Contact your suppliers to find out if there is a similar or better product that is available at a lower cost.
  5. Consider other suppliers if need be, or consider using fewer suppliers if there are guaranteed savings and quality assurances.
  6. Review your buying patterns with suppliers and order certain items (such as linens) on an annual basis with drop shipments several times over the year. This guarantees a volume to the supplier and a better purchase price.
  7.  Create and use a detailed inventory system on at least the top 5 to 10 cost items so you can carefully track usage and to use your buying power to find the best values.

These actions will very likely save a minimum of several percentage points in discounts over the years that will translate into measurable savings.

This resource began with definitions of the words “profits” and “profitability. ” Those words and sentiments are not for hotel owners and managers alone.  The HospitalityEducators.com site has segments specifically dealing with this topic and all 13 strategies.

The full list of tips is available @   HospitalityEducators.com

Dr. John Hogan, CHE CHA working with attendees at the award winning TH&LA Short Course

Feel free to share an idea for a column at info@hoganhospitality.com anytime or contact me regarding consulting, customized workshops, speaking engagements … And remember – we all need a regular dose of common sense.

John Hogan is a successful hospitality executive, educator, author and consultant and is a frequent keynote speaker and seminar leader at many hospitality industry events.  He is Co-Founder of a consortium (www.HospitalityEducators.com) of successful corporate and academic professionals delivering focused and affordable counsel in solving specific challenges facing hospitality today. www.HospitalityEducators.com is a membership site offering a wide range of information, forms, best practices and ideas designed to help individual hoteliers and hospitality businesses improve their market penetration, deliver service excellence and increase their profitability. Individuals wishing to contribute materials may send them Kathleen@HospitalityEducators.com. Special introductory pricing is in effect for a limited time that also includes a complimentary copy of LESSONS FROM THE FIELD- A COMMON SENSE APPROACH TO EFFECTIVE HOTEL SALES.

Dr. John Hogan, CHE CHA CMHS          United States – Phoenix, Phone: 602-799-5375
www.hoganhospitality.com/ Email: info@hoganhospitality.com.

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