3 Tactics to Enhance Hotel Profitability

Are your hotels leaving money on the table?

When it comes to hotel management, profitability isn’t just about filling rooms; it’s about strategic operations, proactive asset and labor management, and leveraging data to make informed decisions.

Every room booked, every boiler running, every overtime hour logged, every asset in use, and every team member on the clock is a piece of the intricate profitability puzzle. The key to success lies in understanding and optimizing these elements to work in your favor. Here, we outline three strategies to minimize costs and improve your bottom line.

Prioritize Preventative Maintenance

Across the US hotel market, assets are aging. According to a recent Actabl review of properties, the average age of an asset has increased from 4.66 years in 2021 to 5.64 years in 2023. In the same time span, the number of assets categorized as “poor” or “non-operable” increased from 22% to 46%. If you neglect an asset, it will inevitably demand attention, often at a much higher cost than regular maintenance would have required.

On average, for every dollar "saved" by deferring maintenance, future capital renewal costs increase by four dollars.

The importance of a robust preventative maintenance and CapEx planning program should not be understated. At a minimum, it’s essential to understand your hotel’s assets, service dates, and maintenance frequency and have processes in place to ensure the assets are being properly maintained.

Utilizing Transcendent by Actabl can help you stay ahead of the game by tracking your assets efficiently with real-time monitoring and key data such as date-in-service, maintenance history, replacement intervals, and estimated costs. This enables hoteliers to assess whether equipment meets performance standards and to make informed decisions on repair versus replacement. By leveraging rich data, Transcendent ensures optimal use of each CapEx dollar, supporting better investment decisions and providing greater fiscal control.

Optimize Labor

Labor is both your greatest expense and your greatest asset. Proper management is essential to avoid unnecessary costs.

Avoid fixed schedules for hourly employees, which can lead to overstaffing or understaffing. Instead, use a forecast to schedule the labor standards you’ve created for each position in your hotel, and then update the schedule accordingly if adjustments need to be made.

Additionally, consider Implementing a labor management system to yield significant savings. For instance, small hotels with 25 employees can save over $40,000 per year, while larger establishments with 100+ employees can save upwards of $150,00 per year with Actabl’s labor management system, Hotel Effectiveness.

Preventing overspending on overtime is crucial. By implementing cross-training, staff members can acquire the skills necessary to handle tasks beyond their regular duties. This approach enables hotels to reduce overtime expenses, allowing team members to cover for each other by exchanging or picking up additional shifts. Many hoteliers rely on ShiftSwap, a feature within Hotel Effectiveness, to facilitate the management of shift pickups and swaps. This feature ultimately empowers managers with data-driven insights to optimize labor and manage contract labor costs effectively.

Leveraging Business Intelligence (BI)

Your data can not be actionable when operating in a silo!

Consolidating and normalizing data is imperative for actionable insights, increased efficiency, and maximized financial performance. With ProfitSword by Actabl, finance leaders can utilize pacing reports to compare occupancy and revenue across properties, enabling strategic adjustments to enhance performance.

Sophisticated forecasting tools allow you to anticipate changes in demand, optimize pricing strategies, and manage financial risks proactively. ProfitSword’s advanced budgeting tools integrate data from all your systems and are tailored to your business drivers, minimizing manual errors and enhancing planning capabilities to maximize revenue.

By prioritizing preventative maintenance, optimizing labor, and leveraging BI, hotel finance leaders can be sure they aren’t leaving any money on the table. Actabl offers a pathway to achieving these goals, providing the support and data necessary to make informed decisions that drive profitability. Especially in hospitality, every decision counts – ensure your properties are equipped with the right tools and strategies!