Talk is rife of a jobs bloodbath as businesses consider closing because of the energy crisis. Hotels are particularly vulnerable as they have to heat their building during the winter. Our clients are reporting that energy costs, which were 2% of turnover, are likely to end up at 13%. One hotelier who runs four hotels in Wales has predicted his energy costs, which were £265k per annum, will now be £1.2m.
Here is my take on dealing with this situation:
Have a good look at your management accounts. If you don’t have properly compiled monthly accounts and KPIs, you are running blind and in great danger. Work out your breakeven sales level taking into account occupancy-based costs such as housekeeping, laundry and part of the energy cost. These are variable. What sales do you need to cover the post Ukraine overheads?
Look at your expected occupancy during the winter and decide from the above if you should close the rooms for say January. If you expect to have lots of events then maybe part of the hotel should remain open.
If you operate a spa and know the costs associated with it, consider closing it for a period as it will be particularly energy intensive.
Increase your prices for F&B. Don’t make the mistake of assuming your customers will resist a price increase. Walk around your carpark and see the cars they are driving.
Calculate the breakeven cost of a room night taking into account the heating and lighting costs of keeping the rooms open. If you expect full occupancy to generate good profits from events and dining then consider room offers which just cover the marginal cost of a room. Monitor this carefully.
If you need help with these calculations, I am happy to advise.