Last Fall, the Cornell Hospitality Research Summit featured several discussions on Hotel and restaurant sustainability. At the heart of the presentations were discussions on sustainable hospitality operations. The key concept of course is that whatever changes hotels implement they need to add to the hotel’s bottom line either by reducing maintenance expenses or increasing profit margins.
The Real Hotel Sustainability Issues
Despite the recognition of adding to the bottom line, the concept of hotel sustainability is sometimes lost in discussions of green initiatives, environmental issues and even the preservation of local cultures. As hotel executives debate the merits of one action versus the other they are forgetting (and therefore not acting upon) the sustainability issues that can help them increase cash flows as well as transform hotel operations into true business units over the long-term.
True hotel sustainability starts with hotel operations that are making enough profit to self invest for improvements and capital expenditures. Once this basic level of survival has been accomplished, ideas and money can then be turned to other green initiatives. Therefore, the first and most important step is making sure that hotel assets are being properly maintained.
Better Hotel Asset and Maintenance Management is Sustainability
The hotel industry has two immediate crisis to face. The first is managing skyrocketing energy costs and the second is finding capital to replace, repair or modernize hotel assets. Although consumers have indicated a desire for environmentally responsible hotel management, it is doubtful many people would want to stay at a hotel that smells, is falling apart at the seams or does not have consistent hot water.
Increasing asset management visibility empowers hotel management to become the cornerstone for a successful hotel. For example, a moderate size hotel can easily spend $100,000 per month on utilities (gas, water, electric). Poorly maintained equipment may run between 75-90% efficiency.
At 90% efficiency, this translates to over $120,000 per year. $120,000 per hotel is a lot of money that can be used to purchase or repair equipment, make cosmetic improvements or even retrofit assets to be more green oriented. How many guests does it take to have revenues of $120,000?
Optimal efficiencies can be accomplished using EAM software to schedule inspections, preventive maintenance tasks as well as other work management tasks. Other examples include:
EAM Created Expense Savings for Hotels
- Lower labor costs as a result of automated work management. More can be done with the same amount of resources.
- Well maintained equipment last longer.
- Lowers capital budget requirements freeing up cash flow, lowering debt ratios
- Fewer emergency repairs
- Fewer guest complaints increasing guest retention
- Mitigated accident liability claims. The CMMS core of an EAM creates a database of all maintenance activity from work request through completed maintenance. Being able to produce a record of consistent maintenance activity may help reduce negligence claims.
- Lower document storage and retrieval costs. An EAM solution has the ability to store asset and vendor documents for ease of access and security.
- Standardized operating procedures across multiple properties. Management reports enable hotel facility executives to review work done on all properties and establish best operating practices.
- Better vendor management. Review vendor performance, eliminate the unresponsive as well as consolidate vendors.
What Can Your Hotel do with $ 120,000
The bottom line for hotel is that sustainability starts with good asset management practices. Making sure that all assets are in good, safe operating condition flows directly to the bottom line. Savings are potentially anywhere between 10-30% depending on the quality of the EAM, training and implementation. Using the example above, the energy savings alone can be used to fund other programs including:
Ten Uses for $120,000 in Asset Savings
- Replacement of obsolete technology (older TV’s, Wi-Fi infrastructure etc.)
- Refurbish pools and spas
- Fund Internet marketing programs
- Improved concierge services
- Repave parking areas
- New lobby furniture
- Hire additional staff
- Roof Repairs
- Better morning buffet
There are hundreds if not thousands of articles on ideas to improve revenue or attract clients. But what is the point of owning a Ferrari if it always in the shop? Better asset and maintenance management separates the best hotels from abandoned buildings and For Sale signs.