Hotel asset management blog

Hotel Asset Management is a discipline that provides a 360 degree view of a hotel. We'll delve inside in this exciting industry. Welcome to this journey.

Reducing costs is a commodity

Reducing costs is a commodity. Quite often, when I speak with different Hotel Managers, Asset Managers or specially white label companies, i hear the same sentence “we are good at managing costs” or “we are good at cutting costs”.

It is undoubtfully that cost control is a super important part of the daily operations of the hotel. However, it is the easier to spot, measure, benchmark it and so forth. 

Hospitality professionals have focused so much on trying to bring value on rationalizing costs that they basically has completely forgot to focus on what the third-party channels distributors are actually taken from the hotel. So actually, if you ask someone how much money are you leaving on the table, the answer is that nobody is capable of calculating it. 

The gamut and complexity of distribution channels has contributed to this confusion. The amount of commissions or the mark up that these companies have is enormous. If you take the case of, it takes between 15% to 20% out of the selling price. Other Tour Operators put a mark up that could be even higher than this figure.

It is a terrible truth. Who can calculate this enormous figure?. It is impossible to calculate. At least I have not been able to specifically reach to that number, after all my interpretations and numbers. 

So my question is; where is the real value?. The real value is to optimize costs. YES. However, it is already a given. Cost control is a commodity. Lots of professionals can do that. The real challenge here is to control your selling channels and being able to measure accordingly. For that, the hotel asset manager shall start focusing on this while controlling costs if he/she wants to differentiate from the rest.

So Yes, controlling costs is important, but controlling and measuring your revenue is where the value comes.  


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