Rent is one of the biggest costs that motel operators might face, and it’s one that has gradually risen, even as service expectations are increasing and revenues are dropping. Most motel operators were originally told that gross income should divide into roughly three equal parts to cover rent, running costs and profit. This is no longer the case, and rent often forms a significantly higher portion, cutting into profit margins.
Energy Efficiency
In many cases, higher rent expenses can be partially offset by reducing running costs such as labour, food, utilities and maintenance. Indeed, one of the biggest savings can be had by altering your energy use patterns and training staff to consider energy efficiency. Here are some ways you might improve energy efficiency.
Lighting
Lighting represents a significant cost, and replacing all your bulbs with LED ones can provide an overall cost saving over the long term. Asking your staff to switch off lighting in rooms when they leave can provide a more immediate saving.
Heating
Heating doesn’t have to be on all the time, and neither does air conditioning. Climate control isn’t always required in backrooms, and turning off heating in kitchens is a great way to keep your staff cooler and save on energy use. Talking of kitchens, only turn on food preparation equipment 15 minutes before it is needed – this can reduce cooking-related energy consumption by up to 60%.
Smart Booking
In the off-season, it helps to place all guests on the same floor in clusters. This means you can turn off lighting and heat in other areas of the motel or hotel, saving significant sums on your heating bill. Aim to keep people on the south side in winter or facing east in summer, as these areas tend to be a little warmer or cooler and therefore require less energy input.
Dim Hallway Lighting
In many cases, there is no need to keep hallway lighting at full power in the day, particularly when areas have natural light. Reduce lighting in hallways during bright hours to keep lighting bills down further.
Reduce Water Temperature
Everyone loves a hot shower, but you need to consider your bottom line. Only heat your hot water to the minimum required — preferably no more than 40 to 45 degrees C — to see a savings in energy costs.
Reduce Laundry
Do away with daily automatic linen changes. A lot of businesses tout this as a green option — fewer sheets to wash means lower electricity bills and more eco-friendly processes. Be up front about linen and towel policies, and make sure people can request clean linens if they desire.
Reducing Rent
There comes a point at which you may have to renegotiate costs with your landlord, particularly if prices rise and your income streams do not.
The important thing to remember is that your landlord simply wants to turn a profit from your business too. In many cases, landlords have extensive financial commitments, having bought the property and possibly having a mortgage on the freehold. Typically, the freehold is a relatively low-risk investment, but it still requires a substantial sum to buy with diminishing returns. This means that your landlord isn’t often being unreasonable when he increases the rent — he simply has his own costs to bear. Consequently, a collaborative approach works a lot better than a combative one. Develop a partnership, and you may be able to reduce your costs.
Overall, it’s important have a good working relationship with your landlord, and part of this is achieved by being respectful. Being open and honest with your accounts can often help, as this shows your financial situation and what you are doing to alleviate the cost of rent through other savings.
In some cases, landlords have been able to inject capital into the property. While it doesn’t lower your rent, it could help you be more competitive and offer better amenities to justify increased costs.
