By Amanda Walters
When needs must, any business needs to think smartly to get out of a problem. And right now, needs really must.
Many businesses are clearly looking to reduce costs in light of the Covid-19 pandemic, which looks set to send the global economy into its worst recession since the Second World War.
Travel restrictions and a lack of consumer confidence have meant holidays, business trips and weddings have been placed on ice – leaving businesses who directly and indirectly cater for such events on the brink of extinction.
While some – albeit limited – activity has now returned thanks to the easing of lockdown and the ‘Eat Out To Help Out’ scheme, it’s unlikely to be enough to make up for the shortfall. Businesses, therefore, need to try every way possible to cut costs and increase profitability on every pound that comes in.
Here are some ways they can look to do that…
1 - Focus on direct bookings
Independent hotels and chains in particular have come to rely on third-party booking sites in recent years. They increase exposure, drive up leads and win you customers. However, rely on them too much and your profit margin could take a hit.
Schemes such as loyalty programs, as well as affordable digital marketing tricks, can be used to reduce these third-party costs.
Direct bookings also provide a direct link between you and the customer – providing an affordable way to get them on your database for the future.
In general, consider how you attract custom and try to attribute a cost to this. If you can trim the price of attracting every person you get through your door – through cheaper marketing perhaps – then you’re on to a winner.
2 - Review your use of space
In normal times, space is a signifier of potential in the hospitality business – it represents how much custom you can handle and your capacity for growth. However, when business slows, spare tables, bedrooms and business suites instead come to represent mounting costs.
Sometimes, it’s possible to capitalise on space you don’t need by looking for new commercial partnerships. Whether it’s for overflow office space, storage or another use entirely, people need space for all kinds of purposes. The trick is to think outside the box. Many businesses are looking for covid-secure places to hold meetings away from their usual office setting and out of the way of busy city centres. Why not capitalise on this? Consider marketing your unused space in a different way to do so.
3 - Monitor energy efficiency
Naturally, your overheads boil down to more than just bricks and mortar. The cost of heating them, lighting them and keeping them clean is also worth considering.
Using efficient lightbulbs, altering televisions to eco settings and patching up any gaps in windows and doors can also help to ensure there’s more money left for the bigger picture.
4 - Invest in technology
For several years, hotels have been using technology to make efficiency savings – room keys can be programmed into smart phones, check-out can be administered remotely, and guests can even request additional services through an app. This can all help to reduce staff costs and in the current era it has the added benefit of promoting physical distancing. Your customers will feel they’re getting the best possible care and your staff will be free to deliver it.
Restaurants and cafes are further away from the front line in terms of this innovation – but ‘pay by app’ is going to be extremely useful – not least because, handled carefully, such propositions offer further marketing opportunities to build a loyal customer base and spread news of offers.
5 - Try internal training
Commercial training is a massive industry – and to those in the hospitality sector, it represents a cost which can often be cut. You don’t have to send employees on costly courses, however. Explore knowledge shares and cross-training programs that can upskill your workforce by using the knowledge you have within.
Cross-training can give your business the flexibility to weather future storms, too, since your people will be better prepared to cover all bases.
You need to hang on to your best people more than ever now too – disruptions caused by a lengthy recruitment process are not welcome. By offering career progression, you’ll motivate and retain employees better.
6 - Upcycle used furniture
Renovations can add commercial value to any business – that’s why high-end hotels spend so much money on art. However, there are ways to achieve your desired look in any setting without breaking the bank.
Browse sites such as Hotel Surplus to find great deals on used designer furniture or purchase vintage pieces from your local second-hand store. With a keen eye for design and a little upcycling know-how, you can achieve the desired look for a fraction of the price. Every business needs a freshen up to keep the punter coming back for more – but right now you need to consider how this can be done with minimum cost.
7 - Buy in bulk
Some things simply can’t be cut when you’re serving customers – you need food to make up your menu, cosmetics for the toilets and cleaning products to keep the whole place shining (and safe!).
Purchasing items in greater numbers – and storing the stock in vacant rooms – can result in significant savings. In fact, some estimates place that saving rate as high as 83 per cent. Once you add up all those bars of soap, loaves of bread and bottles of detergent, you might find you’re in for attractive savings in the medium term. That’s especially worthwhile if you’re able to get a deal from suppliers who are in similar need of business right now.