Controlling Hotel Overheads and Costs by Outsourcing Marketing

Finely Sliced Cuts

To Reduce Drain On Hotel Capital

Author: Mark Sean Elliott – Managing Director at Sparks4Growth

Hotels have been forced to adapt rapidly, consolidate management of multiple estates and faced agonising decisions to thin down resources. In the UK the Furlough scheme has protected some jobs but many valued employees have had to be let go, from the very top all the way down.

Yet, deeper cuts are going to be needed to ride out the period of reduced revenues, bookings, F&B, events and conferences – whilst still maintaining operations and attracting potential guests.

Guest numbers are slowly picking up, but with less staff to cover all aspects of ‘normal’ operations, spending has to be kept lean until a full occupancy rate and other services such as F&B are in full flow again.

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Controlling Hotel Costs

Some functions within the Group or Hotel structure have potential to be outsourced. To reduce resourcing expenditure and bring down overheads. Retaining core staff, particularly at the customer facing side and sales teams are crucial to maintaining a ‘business as usual’ quality and guest experience.

 

Outsourcing Hotel Operations “On/Off Model”

Food services for example have been adapted by some hotels by offering guests in-room dining, provided by outsourced catering companies or restaurants, to provide a high-quality standard of cuisine, whilst keeping kitchen costs and food wastage down. Particularly flexible model, whilst guest numbers recover and restrictions to opening in house restaurant/bar services are in place.

In effect an ‘on/off’ approach lean in terms of overheads and high in reducing costs.

Arguably, functions such as Accounting, HR, House-Keeping and In-House Marketing could be reviewed as areas for potential savings in the short-mid term and without affecting the guest experience.

These services are readily available as outsourced functions, run by well established and professional organisations and experts. The functions can be switched on/off as needed and paid on a ‘pay-as-you-go’ basis, without the overheads associated with resourcing in house.

 

Slash Your Marketing Overheads

Marketing expenditure is often the ‘first to be sliced’ when lean times are faced. Certainly for hotels (and hospitality more widely) there was little point driving marketing to customers whilst premises were shut. Albeit keeping in touch with customers, as many hotels did during lock-downs, helped them to restart smoothly and retain customer engagement/confidence.

Now is not the time to massively ramp up expenditure on marketing Ad-Spend or other extraneous campaigns. Consumer demand and confidence is still relatively ‘soft’ and likely to slowly increase across Summer, into the Winter 2020.

How likely are people to book a holiday in 2020 in the United Kingdom?

However, by fixing a budget and allocating this to campaigns that attract in those guests who are ready to travel, stay in your hotel, eat at your restaurant is a wise choice. A recent poll showed that 51% of people surveyed are likely to book a holiday in 2020. And that 37% would be opting to do so in their own country (Staycation).  This is likely to increase as the Summer Holidays commence, confidence rises. So a significant market to play for to drive up occupancy and drive revenues.

 

The Right Formula is Mixing In House and Outsourcing

Slicing off unnecessary overheads and costs is clearly a requisite, outsourcing provides one part of the solution and only where appropriate/feasible.

Marketing is an obvious area to hand-off spending from in-house resourcing and recruitment costs, to an outsourced partner. Particularly to a reputable agency like ours who truly understand your customers, your sector and are adept at pin point targeting customers. Maximising potential ROI whilst lowering spend and overheads.

Tom Luersen, president, CoralTree Hospitality recently stated:

“Rather than blanketing the traveling public with our message, Tom suggests keeping costs and results in line by using targeted digital messaging and leveraging social media platforms to reach a first-wave market of transient/leisure guests and the drive-to market.”

If forward bookings are secured as previously mentioned, communications prepared ready, then revenue generating services can be capitalised on more swiftly and before the competitors choose to do so.

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Savings Cost Nothing But A Small Amount Of Time

We are here to help with your consideration as a marketing company who specialise in hospitality marketing. And if you are considering outsourcing for a period of time to manage through uncertainty we can provide you with expertise to inform your decision.

Please book in with us for a no obligation call to talk through, by simply filling the contact form below. It costs nothing but a short amount of time on a call. I am confident that you will save costs and improve results through our expertise.


 

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