(Reprinted from BarterNews issue #36, 1996.)
Creative Thinking, Closer Cooperation, And Bartering Will Ensure Greater Profits For Independent Hoteliers
Now that hoteliers have completed the budget process for 1996, it's time to think creatively to achieve other significant savings! Here are some thoughts on the way to do so, using barter to bring more profits to the bottomline.
Printing: Independent hotels in a state where costs are high should consider subcontracting printing to a company with very low costs. (Contact properties in a low-cost state and ask who they use.) Better yet, talk to other hoteliers about pooling your purchasing power and work through a strong corporate barter company or a regional trade exchange for your printing needs.
If you do a lot of direct mail, ask service groups to prepare the mailings, and pay them with trade dollars and/or an "incentive package," i.e. rooms and food they could raffle off to make a profit. You'll save the fringe benefit costs, plus the headaches and expenses of payroll. Another savings can be obtained by using "shells" for your newsletters, brochures, and other materials.
Training: Working with barter professionals for advertising needs is already being done by many hoteliers and should continue to be pursued. But hotels can also save advertising money in another way...by banding together to consolidate "help-wanted" advertising costs.
Most Sunday newspapers have several hotels and restaurants advertising for the same position. If ten hotels united, they could probably reduce newspaper advertising by 75% and still run big, bold, display ads every Sunday.
One person could screen resumes, initiate a standard application for hotels, run reference checks, use diagnostics, and conduct background investigations. The qualifying r�sum�s could then be forwarded to all participating hotels with an opening in that position. If all the hotels share in the cost, it works out to pennies per candidate.
Combining human resources for several hotels in one location would enable the hiring of specialists to help hold down worker's compensation costs and lost-time accident costs.
Get together with competing hotels and set up a non-profit company to process human resources for all the hotels. The talent pool available for hotel employees is not always good. Employees must be trained and they must be retained.
Even chains find handling human resources very difficult. Because their properties are scattered across the country, they have trouble achieving economies of scale. The only way to do it is on a local level. Non-profit status can help circumvent the government taxing and regulating the function into oblivion.
Accounting: Many hotels sub-contract out their payroll. Here's another cash-flow savings as these services are now available through the larger trade exchanges in your market.
Housekeeping: Hotels are experimenting with employee leasing, especially in the housekeeping area. Many hotels have subcontracted their laundry operations for years. Housekeeping can realize serious savings through better management of inventory and technology, from supplies to rooms cleaned per person. For example, hotels can routinely achieve from 20 to 22 rooms cleaned per person.
By working together, either formally or informally, hotels can reduce labor and supply costs significantly. How many days per week do most hotels end up paying more labor than needed just to handle an extra half-dozen rooms? Odds are the hotel next door is doing the same thing. If both hotels shared just a few employees, they could eliminate another $15,000 to $20,000 in salary.
Engineering: Small hotels rarely have property-management programs, are almost never computerized and seldom have the technology really needed. On the other hand, medium-size and large hotels usually have engineering personnel with higher skill levels than needed for an eight-hour work day.
Larger hotels could economically provide the service to smaller hotels and achieve a revenue source to offset part of the costs. Lower bills could help smaller hotels realize savings that more than offset the costs.
Risk Management: Risk management is defined here to include safety, security, loss and fire prevention, claims management, general liability management, insurance policy specifications, as well as safety-, security-, and fire prevention-equipment selection and installation.
It's estimated that small, full-service hotels overpay at least $75,000 per year on risk management. Yet, only the largest chains and management companies have a risk manager on staff. Hotels need to do a much better job of managing this area.
Risk management is a complex field and there are many specialists. They don't come cheap, but they are definitely worth it.
Hotels can minimize their exposure to risk and their expenses. A good place to start is with a property assessment on where your greatest risks are. There are excellent consultants who can provide this service inexpensively and it only takes a day or two. Based on the results of the assessment, you can identify your potential savings.
Why not band together and purchase collectively, use the same standards, or simply work together when you need to bring in a specialist? Isn't an extra $75,000 gross operating profit worth it?
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