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High costs in hospitality business: simple actions for immediate savings

In today’s fast-evolving business landscape, hospitality operators are under increasing pressure from rising operational costs.

These growing expenses pose a serious challenge to maintaining financial stability, staying competitive, and continuing to deliver outstanding guest experiences.

Energy, operational, and maintenance costs are demanding

This is a huge challenge particularly when you’re striving to meet high standards but are limited by the available budget.

And as we know, a lack of resources to invest in service improvements often leads to lower guest satisfaction, which in turn results in fewer positive reviews and a long-term decline in the hotel’s reputation.

Effective cost management is essential

It’s clear that when a hotel manages its costs carefully, it operates more efficiently and becomes more profitable. But by how much does profitability actually increase?

A 2022 study by the Portuguese Center for Tourism Research found that hotels implementing strategic cost management practices boosted their profits by 15%.

These practices include:

- optimizing labor costs,
- reducing energy consumption,
- and improving procurement processes.

By focusing on efficient cost management, hotels can:

allocate resources more effectively,
improve service quality,
and achieve stronger financial results.

Key hotel operating costs

Energy costs

Energy expenses account for approximately 6% of a hotel’s total operating costs, placing them among the highest expenditures.

What exactly do energy costs include?

Heating, cooling, lighting, and powering equipment - all essential to smooth hotel operations.
Continuous energy consumption, as hotels run 24/7, 365 days a year.
High guest expectations for air-conditioned or heated rooms, ideal temperatures, and flawless lighting - all of which drive energy use even higher.

Unpredictable energy price hikes, which further strain hotel budgets and complicate long-term financial planning.

Maintenance and repair costs

Due to intensive usage and peak occupancy periods, hotel facilities require consistent upkeep. Maintenance costs—especially those related to repairs and infrastructure upgrades—have a significant impact on the financial stability of the hospitality industry.

Without proper facility management, issues quickly arise, such as:

damaged rooms,
poorly maintained common areas,
and worn-out equipment.

All of these can lead to negative guest experiences.

A study by CBRE Hotels Research analyzed property operation and maintenance (POM) costs across 2,900 U.S. hotels between 2015 and 2021. The findings revealed that, on average, these hotels allocated 4.5% of their total revenue to maintenance and repairs in 2021.

The cost of guest dissatisfaction and technology

Guest dissatisfaction and underinvestment in technology can significantly impact a hotel’s long-term financial stability and competitiveness.

Unhappy guests leave negative reviews on online platforms, which undermines trust and reduces future bookings.
At the same time, a lack of investment in service and comfort improvements results in a subpar experience - and guests won’t hesitate to look elsewhere.

An article titled “Hotel Managers Will Become Psychologists” published in Glas gospodarstva by the Chamber of Commerce and Industry of Slovenia features an interview with Gregor Jamnik, General Manager of Hotel Slon in Ljubljana.

In the interview, Jamnik cites a global STR Global study showing that even a 0.1-point increase in a hotel’s average guest rating (on a 1–10 scale) can lead to a 1% increase in RevPAR (Revenue per Available Room).

This clearly indicates that higher guest satisfaction enables hotels to raise room and service prices - ultimately resulting in increased profit and greater opportunities for reinvestment.

Technology and staffing costs

Today, investing in technology is essential. It streamlines services, enhances guest satisfaction, and helps hotels remain competitive. However, most digital solutions come with high upfront costs and ongoing maintenance requirements. Key investments typically include:

- Reservation management systems
- CRM solutions
- Communication channels

Labor costs

Due to the 24/7 nature of hotel operations, labor expenses represent one of the largest and most unavoidable cost categories. Hospitality demands skilled staff across all service touchpoints - from reception and housekeeping to food service and wellness.

Labor-related costs include:

Recruitment of qualified staff: The complete hiring process to ensure personnel can deliver a wide range of hotel services
Salaries: Ongoing compensation aligned with roles and responsibilities
Training and development: Upskilling employees to stay current with technology and evolving guest expectations
Retention programs: Investing in employee satisfaction and loyalty to reduce turnover
Turnover-related costs: High staff turnover leads to constant recruitment, onboarding, and training - increasing operational strain and expenses

Without a stable and well-trained team, service levels drop, morale weakens, and remaining staff become overburdened - setting off a cycle that’s hard to break.

A shortage of qualified, experienced staff creates a vicious cycle - one that lowers morale, increases turnover, and places even more strain on your existing team.

How to reduce hotel operating costs

Optimize energy use

Energy costs make up a significant portion of hotel operating expenses. That’s why improving energy efficiency is a critical step toward financial sustainability. Investing in modern systems for heating, cooling, and lighting can result in substantial savings.

According to the U.S. Environmental Protection Agency (EPA), a 10% reduction in energy consumption can deliver the same financial impact as increasing the average daily room rate by:

$0.62 in limited-service hotels
$1.35 in full-service hotels

Proven ways to cut energy costs:

Install LED lighting. LEDs consume less energy and last significantly longer than traditional bulbs. This simple upgrade helps cut electricity costs and reduce maintenance frequency.
Use smart thermostats and motion sensors. These systems adjust temperature and lighting based on guest presence. For example, when a room is empty, the system lowers the temperature and dims the lights - reducing unnecessary energy use.
Automate energy consumption. Automation doesn’t just conserve resources - it directly boosts your bottom line. You can maintain guest comfort while keeping energy use in check.
Conduct regular energy audits. Frequent inspections help identify inefficiencies in your systems. Catching issues early means you can fix them before they escalate into bigger problems.
Continuously upgrade your systems. Energy audits also provide insight into opportunities for innovation. Upgrading to newer, more advanced energy solutions ensures long-term savings and adaptability to changing market and environmental demands.

Preventive maintenance

Another key element in cost optimization is preventive infrastructure maintenance. Proactively caring for your facilities extends the lifespan of equipment and buildings while reducing the frequency of costly repairs and urgent interventions.

Implementing a preventive maintenance strategy leads to measurable cost savings. A study by the U.S. Federal Energy Management Program (FEMP), conducted by a national lab, found that preventive maintenance programs can generate 12–18% savings compared to reactive strategies.

Research from Jones Lang LaSalle (JLL) further highlights the value of prevention. Their findings show that properly maintained centrifugal chillers can extend their lifespan from 15 to 23 years — more than a 50% increase.

Process automation

Investing in automation technology delivers a double benefit: it significantly reduces labor costs while boosting overall productivity.

According to a study by Boston Consulting Group (BCG), hotels that adopted automated check-in and check-out systems reduced front desk labor costs by 15%. This saving is largely due to decreased manual workload and the ability to reassign staff to higher-value guest services.

Automation empowers hotels to streamline repetitive tasks, create more efficient workflows, and provide a smoother, faster experience for guests - all while keeping operational costs under control.

To automate hotel operations, you can implement a simple and quick-to-deploy hotel guest app. This solution can support multiple areas of your business while significantly reducing costs.

Here’s how:

Lower labor costs The app automates routine tasks, reducing the need for additional staff. Less manual administration means lower hiring and training expenses.
Digital task optimization By automating repetitive tasks, existing staff can focus on more complex and valuable work - boosting productivity without increasing headcount.
Guest independence Guests can check in and out, order room service, and communicate with hotel staff directly through the app. This lowers front desk workload and shortens wait times.
Flexible workforce planning With seasonal demand fluctuations, the app makes it easier to adjust staffing levels through flexible shifts or seasonal hiring - ensuring optimal coverage year-round.

Improved guest satisfaction The app enhances the overall guest experience while easing the pressure on your team - leading to greater satisfaction, smoother operations, and long-term cost savings.

Green operations

Environmentally responsible practices are becoming increasingly important in the hospitality industry. Guests are actively seeking accommodations that respect natural resources, and hoteliers are looking for ways to reduce both energy use and operating costs.

A study published on the MDPI platform analyzed a luxury hotel in Portugal and found that environmental initiatives can yield significant financial savings. With energy-efficient solutions, the hotel saved between €100,000 and €150,000 annually in energy costs.

These savings came from measures such as:

Installing energy-efficient lighting: Lower electricity consumption and lighting costs
Implementing geothermal systems: More efficient heating and cooling using natural energy sources
Using solar energy: Lower utility bills and reduced carbon footprint
Optimizing HVAC systems: Greater energy efficiency and lower operating expenses
Water-saving strategies: Reduced water usage and lower utility and drainage costs

Beyond the financial benefits, these initiatives enhance the hotel’s appeal to environmentally conscious guests who value sustainability.

A key step toward greener operations is waste reduction. Hotels can introduce recycling programs, minimize single-use plastics, and optimize water and energy usage.

Encouraging guests to reuse towels and linens also helps reduce water, electricity, and detergent consumption - all while lowering operational costs.

Personalization through modular solutions

Introducing personalized services is another powerful way to reduce costs by increasing guest satisfaction and strengthening loyalty - which ultimately lowers marketing and acquisition expenses.

According to a study by the Swiss hospitality school EHL, hotels that offered personalized guest experiences saw a 14% increase in repeat bookings, reducing the need for extensive marketing campaigns to attract new guests.

By understanding and anticipating guest preferences, you can:

allocate resources more effectively,
optimize staffing,
and reduce waste

all of which contribute to lower operating costs.

This is where a guest-facing hotel app becomes a valuable tool. With modular features, the app enables hotels to offer a truly personalized experience - from room selection and dietary preferences to in-room service requests, stay extensions, bookings, and other extras.

A modular approach allows hotels to roll out only the functionalities they need, when they need them. This keeps initial investment low while boosting operational efficiency.

The result?

A more satisfied guest who experiences a personal, tailored stay - and a hotel operation that’s leaner, smarter, and more cost-effective.

Innovative ideas for immediate cost reduction

Here are some unconventional yet practical ways to cut hotel costs - changes that can be implemented right away without overhauling your core operations.

Of course, not every tactic will fit every property. Luxury and boutique hotels, in particular, may need to consider how certain changes could affect the guest experience.

We’ve grouped the ideas by department:

1. Housekeeping and laundry

Optimize laundry loads Wash only at full capacity and adjust washing frequency based on occupancy to reduce water, electricity, and detergent costs.
Use bed runners instead of full duvet covers Easier to clean, less wear on linens, and lower laundry volume.
Use toiletries until fully consumed Allow guests to reuse partially used soaps and shampoos, or consolidate leftovers into refillable containers.
Smart vacuuming strategy Focus daily vacuuming on high-traffic areas rather than cleaning every space every day.
Adjust deep cleaning schedules Perform intensive cleaning only when needed, not on a fixed schedule - saving labor and cleaning product costs.

2. Front desk and guest services

Promote self-check-in Reduce front desk staffing during slow periods by offering digital keys, kiosks, or guest-facing apps.
Fully digitize receipts and invoices Eliminate paper, printing, and printer maintenance costs.
Automate FAQs Use an AI chatbot to answer common questions like breakfast hours or Wi-Fi instructions - easing the load on front desk staff.
Limit key card distribution Issue one key per room by default, unless more are requested - saving on cards and encoding costs.
Shorten lost-and-found retention periods Instead of storing items for months, donate or recycle them after a set timeframe.

3. Food & beverage (F&B)

Trim down the menu Focus on top-selling items to reduce ingredient costs and food waste.
Offer a “leftover specials” menu Sell dishes made from surplus ingredients at a discount.
Switch to QR code menus Eliminate printing costs and enable real-time price or menu updates.
Serve filtered water instead of bottled Save on purchasing and storing bottled water while reducing waste removal costs.
Optimize breakfast offerings Track which items are often thrown away and replace them with more popular or affordable alternatives.
Implement mandatory restaurant reservations Reduce food waste by better forecasting meal prep needs.

4. Maintenance and energy

Pre-set smart room temperatures Avoid overcooling or overheating - maintain optimal comfort while saving energy.
Install motion-sensor lighting Reduce energy use in hallways, storage rooms, and meeting areas.
Replace bulbs only when they burn out Swap individual bulbs instead of full light fixtures to cut unnecessary spending.
Lower water pressure in faucets and showers Install flow restrictors - guests won’t notice, but you’ll see the savings.
Repair rather than replace Fix or refurbish damaged furniture and equipment whenever possible instead of replacing them outright.

5. IT and administration

Cancel unused software subscriptions Review software usage and drop licenses that aren’t actively used.
Switch to cloud services Reduce hardware needs, maintenance costs, and electricity usage.
Automate billing and admin tasks Use digital solutions to cut down on manual data entry and reduce admin staff workload.
Adopt open-source software Replace expensive commercial programs with reliable free alternatives to cut long-term costs.
Enable remote work for administrative staff Reduces the need for office space - lowering rent and utility expenses.

6. Marketing and sales

Leverage guest-generated content Encourage guests to share photos and videos instead of hiring professional photographers.
Partner with local businesses instead of paying for ads Arrange mutual promotions with nearby restaurants, tour operators, and service providers.
Audit and optimize your loyalty program Ensure rewards are valuable and cost-effective — avoid perks that don’t drive real loyalty.
Limit printed promotional materials Replace flyers and brochures with digital signage, email, or app-based promotions.

Increase direct bookings Offer small incentives for guests booking directly through your website - helping reduce OTA commission fees.

The impact of Nevron mobile on your hotel’s operating costs

What happens when you implement Nevron Mobile?

You immediately unlock opportunities to reduce costs, streamline operations, and enhance the guest experience — all at once.

Less pressure on the front desk

Guests can check in even before arriving or while waiting in line — directly through their mobile device.

Fewer room cleanings

With the Skip Cleaning option in Nevron Mobile, guests are more likely to opt out of daily room cleaning than they would when asked in person. This reduces housekeeping workload and lowers water, detergent, and electricity use.