Cost Containment

Cost containment is a dreaded phrase that typically is spoken around mid-year when revenue forecasts shift in the less desired direction, it doesn’t have to be so scary.  This year in my hotel we started to see a down turn in both occupancy and rate so we needed to take action, being that I have new leaders on my team that have not directly been involved in cost containment exercises, I thought it best to take a different approach.  When meeting with the leaders to decide together what areas we can save I asked them to think of things they would do, not do, or shift to another time in their households.  Is running household expenses much different from running hotel expenses?  This was our chance to find out.


As a team we, we sat down and decided we would hold off on cleaning the windows on the building for the second part of the year as they still look good, much like if you can hold off on cleaning the windows in your home.  Next we moved on to smaller things we adjust a like moving to whole fruit instead of sliced fruit, one example that over several months yields a nice amount of savings.  We did have to make a difficult decision and hold off on filling an open position which is not the popular thing to do with the rest of the team but with everyone’s agreement with the “household” decision, we would be sure to go at this together.  These items are “quick hit”.


In the process, you come upon areas where it seems counter-intuitive as we did, one being an investment in a marketing campaign where you have no allocated funds previously.  We decided to invest the money into this campaign as it had driven revenue at one of our sister hotels so we believed it would do the same for us.  I associate this with buying a new suite for the interview for a job that will increase your salary and benefits, you may not have the money for the suit now but you believe by looking the part and feeling confident you will win the job.  Next up, travel, the first place we all look is to cut travel, personal and business, why travel if you don’t have the money.  In business, it is necessary at times to invest in the travel of the sales manager to meet the client and win the business.  This is a tough decision as you don’t see the results immediately but realize the cost immediately.  I see this as an investment into the future (cost-benefit analysis).


Cost containment does not have to be a frightening process, look at it as an opportunity for you to examine your finances and become more efficient.  Sometimes it even helps to invite someone from the outside with fresh eyes.  Don’t fret, work to gain the buy in of the majority of your team and work to balance the books, not very different from what we do everyday at home.


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