Operations Management in the Hospitality Industry: Managing Costs and Maintaining Quality

How to Manage Costs & Maintaining Costs with Effective Operations Management

Managing the operations of a hotel is a complex area that can have a significant impact on the success and profitability of the property. Successful operations management in the hospitality industry requires successfully balancing growth and profitability with delivering on promises and maintaining quality standards across the board. Clearly, the latter area is something that has a significant impact on the long-term success of the hotel.

Managing Costs

Managing costs is always a great area of concern to a hotel, but it can often be a mistake to simply take the approach of trying to reduce operational costs at every opportunity. While reducing costs may improve profitability over the short-term, the long-term negative repercussions can often far outweigh the initial savings.

For instance, a recent article by TFG Asset Management gave the example of salary reduction. While reducing staff pay may improve the bottom-line yield, the action is likely to significantly demotivate staff and mean that service levels are reduced, thereby resulting in a poorer guest experience. This may significantly harm long-term profits because guests will not want to keep coming back to a hotel that provides a low level of service, while recruitment costs may rise as staff become less loyal to the hotel and begin to leave the organisation. Managing costs effectively is a key challenge in operations management in the hospitality industry.

In addition, it is important to recognise that reducing costs often requires a short-term investment for longer-term benefits. As an example, taking the decision to refurbish a hotel and bring it up-to-date will require significant initial expenditure but may be repaid massively over future years as the hotel is made significantly more attractive in the marketplace.

In short, cutting costs may actually have a negative impact on the bottom line. It is extremely important to measure the impact of any action and look at the consequences it will have over the long-term.

Maintaining Quality Standards

As we have already discussed, balancing costs while also maintaining quality standards is a constant challenge for any hotel. It is important to operate efficiently – but that shouldn’t be to the detriment of guest experience. In order to be successful over the long-term, a hotel needs to work hard to maintain consistent quality standards.

When it comes to delivering high standards of service and ensuring guest satisfaction, one of the most important factors is the quality of staff that are recruited into the hotel. Successful operations management in the hospitality industry requires a strong management team, with clear leadership, a carefully planned organisation structure and well-defined roles. There should also be an effective and thorough recruitment strategy in place to ensure that the right people are recruited into each role, with enough time allocated to finding and choosing suitable candidates.

In addition, it is important to invest in the training and development of staff. This can help greatly towards ensuring that high quality service levels are consistently delivered, while also helping to increase staff loyalty and meaning that team members are less likely to leave the hotel and seek employment elsewhere. It is also important to ensure that staff are looked after and rewarded in the best possible way, with each team member being made to feel valued and appropriately rewarded. This is vital in ensuring loyalty and commitment over the long-term.

Managing Operational Changes

Successful operations management in the hospitality industry requires the hotel to constantly monitor and improve operations over time. Where operational changes are required, these should be carefully managed and implemented with a clear goal in mind, with enough time being allocated to the program. Relevant staff members should be involved in the development and implementation of practices as much as possible in order to ensure that they are rolled out effectively.

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