Recent “commoditization” of the hospitality industry has encouraged companies to compete on price, and achieving differentiation through service has required higher investment (higher quality, shorter operation cycles), reducing overall profitability. Every year, surveys are conducted that clearly outline companies’ need to reduce costs and increase operational efficiencies. Many companies have already made great headway in accomplishing this goal by reducing complexity, implementing best practices and leveraging best-of-breed technologies.
While the hotel industry has experienced strong revenue growth over the past few years, however, bottom-line performance has eroded since 2000, due to escalating expenses, including “non-controllable” costs such as utilities, insurance and government regulation. These costs – along with “controllable” costs such as payroll, staffing and marketing – are expected to only increase in the years to come.