How can hotels manage rising cleaning costs?

The Lowry Hotel, in the heart of Manchester, is abuzz with energy planning for its reopening. Jason Orton, director of operations at the hotel, unsurprisingly has a lot of this planning on his plate.

Among these duties: Placing out signs communicating the one-way path through the halls, reassuring his staff about the reopening process, sourcing high quality cleaning supplies, and installing new state of the art temperature scanners. At the front of his mind, and of so many other operators during this period, is safety.

The rise of the pandemic has changed the way we imagine safety and cleanliness in service centric businesses. The daily clean is no longer enough; for a store or property to be considered safe it needs minimal usage contact points, consistent PPE usage, and most importantly a high intensity cleaning regimen. Many of these regimens have been institutionalised, with hotel chains like Hilton, IHG, Wyndham and Mariott, alongside short-term rental giants like Airbnb and Vrbo integrating these enhanced cleaning programmes into their businesses going forward.

Coupled with this however is the increase in expenses. An article from Skift quotes the potential rise of costs at around $9 billion each year for the industry, with the average 150-room hotel spending around $30,000 in additional materials. Beyond that, the act of many properties spending more time cleaning common spaces has turned the old cleaning model on its head – one that has helped businesses cut costs in the past.

For hotels looking to reopen, these costs are an expected part of doing business. But to what extent are they sustainable going forward? With hospitality being an industry already working on thin margins, are cleaning costs at this level accessible for a wide array of hotel businesses?

Firstly, what are the major costs which are coming into place?

Elements like PPE, sensors and sanitising stations require a certain level of upfront costs. Temperature sensors in particular can cost around £10,000 for the highest quality models. Furthermore, certain hotels are changing the chemicals using for cleaning, which equally add to the burden of cost.

Anna Chrzastek, head housekeeper for Farncombe Estate, said: “We need to remember that not only the cost of purchasing disinfectants has increased, but also the amount of disinfectants used on a daily basis. In connection with the above, we can estimate at least a doubling in expenditure on cleaning, disinfection and PPE.”

More importantly, however, is the issue of labour and procedure. Hotels have often had to put in place enhanced regimens, most often changing the amount of time spent on each individual room. This can go so far as creating one-way systems and removing buffet breakfasts.

Kuldeep Badesha, general manager of the Hotel Indigo, Edinburgh, said: “In line with government guidelines we have reviewed and updated our risk assessments, put social distancing markers in place, implemented a one-way system into the hotel, as well as adopting a grab and go breakfast each day. We have also amended the way that we clean rooms to allow extra time to the team to get things just right prior to our guests arriving.

“We have wall mounted hand sanitiser units in place and PPE available to all team members and guests alike. All areas of the business have been reviewed and adapted given the current and ongoing situation we face.”

Much of this impacts cleaning efficiency. For example, surfaces that were most likely ignored previously must now be fully disinfected. The threshold for what defines cleanliness is significantly higher.

According to research from Optii Solutions, the average time spent cleaning a room will rise by at least three minutes, from 39.3 minutes to 42.3 minutes. This is accompanied by the cost-per-room rising to $10.12, above the standard average cost of $9.42. The company estimates that an average 250 room hotel will be spending at least $130,000 per year on new cleaning protocols.

The reality of leisure tourism returning first may also be a major cause of expenses rising.

Soenke Weiss, co-founder and chief strategy officer at Optii, said: “The leisure segment is by far the most expensive to clean. According to the numbers that we’ve done here, [a leisure room] is 27 per cent slower to clean than, let’s say, a conference room.”

These rising expenses are supplemented by the existing difficulty businesses will have making money. According to data from HotStats, during the early phases, GOPAR fell over 100 per cent year on year to 2019, one of the largest recorded declines.

This goes double for smaller markets. The US state of Arkansas, having fully reopened hospitality, still recorded occupancy rates under 50 per cent. This is beneath the 60 per cent occupancy rates used by Optii and other data firms to judge the impact of cleaning costs.

These costs, however, can effect all types of hotels differently. Larger brands, by virtue of their size, are able to spread costs more effectively across supply chains. Furthermore, some are able to use those savings to implement unique strategies that may have an effect on consumer confidence.

A core issue with this is the reality of consumer confidence. The primary aim of sanitation at the moment is to attempt to reignite confidence in the hospitality sector, convincing people that it is safe to come in. In doing so, many groups will implement ideas which exist primarily to improve that confidence.

Orton notes: “It’ll be dictated by the guest. If they don’t feel confident, they just won’t book.

“There’s the same amount of hotels and B&Bs out there, but the supply to them is not as great because people are nervous. It’s about who they trust the most to book with. ”

Also important with regards to cleaning is labour. Due to the nature of the market, the pandemic may lead to stagnation in wage growth, and will reorient who is working in many housekeeping roles.

Weiss said: “This may arrest the growth of wages in housekeeping roles. High unemployment in hotels, with businesses not in a position to provide wage growth, [means] it will be a couple of years until growth will return.”

Rather, the cost issue would instead require more employees to work on fewer rooms, and that cleaning employees may log higher hours. This may force employers to change how they think of cleaning moving forward.

With these expenses rising significantly, hotels will need to come up with new strategies to keep their costs down.

The most obvious response to this is simply to raise room prices. However, the reality of the margins and competitive nature of hotels during a period of reduced demand may make that impossible.

Weiss noted: “It’s most like the airline industry after September 11. Things like in-flight meals, which once were standard, became paid options.

“Any kind of in room supplies that survive a guest are going to be a problem. You can’t just place minibar items or spare toothbrushes in the room anymore, because you will have to sterilise every single item, so those items will probably become optional extras.”

One such option that may be made extra is the stayover clean. Because it requires additional effort and causes cleaning staff to break the environment of a guest, eliminating it is an easy way to save money and can be promoted as a safety decision.

Another alternative is to shift around potential suppliers and cleaning materials to acquire more cost-effective brands. By finding different types of disinfectants that are more easily stored, or alternatively using disinfectants that have shorter contact times, then businesses can reduce price and can ensure immediate implementation

Chrzastek notes: “Personally, I would suggest looking for chemical suppliers who offer disinfectant concentrates and automatic dosing systems. An important issue when it comes to disinfectants is contact time and whether they can be used on all surfaces including upholstery, electronics, marble etc.

“Short contact time disinfectants are usually ready to use due to high demand and hence price. The price of disinfectants is currently secondary, but very important, especially for small businesses.”

For others, the reality is that being nimble may be the only way to prepare. By keeping a mindset that isn’t locked into a singular solution, an operator will be able to succeed.

Maurizio Redaelli, owner of Cottage Lodge Hotel, said: “Be ready and open minded in changing fast and improving what you may have put in place before the reopening. With the experience of running the hotel every day and facing different challenges, we managed to improve some of our practices along the way.”

A strategy which may be useful for some hotel brands is the idea of housekeeping regionalisation. Rather than simply outsourcing, this would allow independent properties to band together and have a singular management team controlling multiple properties. This in particular may be effective for independent hotels in cities, allowing them to access economies of scale on the same level of larger chains.

Weiss notes: “Where you have the ability to offset costs is in management. Housekeeping is still a very manual department; you have a manager with supervisors working for him who keep track of those on the floors.

“Because they only communicate via paper and walkie talkie, it isn’t very efficient, and they need to have a lot of managers and supervisors. By regionalising your operation and having one director of operations in charge of multiple hotels, you can now remove management team members from the equation and very effectively control your costs.”

Some, however, are unable to do this due to either the nature of their business or due to various connections. When contacting Hotel Indigo Edinburgh, they told me their status as part of IHG meant that any sort of regionalisation would not be possible.

For other businesses, the personal touch of their own cleaning regimen is an important part of what defines their brand. Orton noted that attention to detail is a key part of the Lowry’s branding as a luxury property, and he’s gone a step further, working with a company in The Netherlands to provide branded hand sanitiser inside each room. Furthermore, the hotel has imported high quality cleaning chemicals from the US in order to provide a competitive edge.

Orton notes: “My advice is not to cut costs at this time. For me, especially for small independents, if they want people through that door it is all about consumer confidence.”

“If smaller hotels are not following larger brands, who will book?”

The idea of the competitive edge comes back around to consumer confidence. With hotels across the world mostly allowed to operate again, many are hoping to attract business in order to make up for missed revenue. To them, the scariest idea is that a limited pool of guests will choose another business.

Perhaps that’s why many have followed Orton’s footsteps and have made the decision to just spend. Badesha, Redaelli and Chrzastek all noted that ensuring guest safety and experience is more important than managing costs at the moment.

Chrzastek says: “The key element is finding a golden medium that will allow independent hotels to balance the costs, but without affecting the guest experience.”

What is not clear, as of this point, is the longevity of many of these requirements. While social distancing requirements are part of law, these may change before the end of the year. More pressingly, nobody knows at what point consumer priorities around safety and security will change.

Weiss said: “Let’s assume that we’ll have a vaccine coming within the next 12 to 24 months, there is going to be some kind of complacency setting in as there always is. That may be three or four years away, though, that some of the more extreme measures that hotels are takin.

Cleaning costs are an inherent reality of the times we live in, and any business that is customer facing is required to improve their efforts during this time. And while these cost increases and changes may not be permanent, it may behove hotels to treat them as if they are.

There is a likely chance that consumer behaviour in the future will focus much more heavily on sanitation elements. That part of the population, still too worried to do more now, will not immediately shift their habits. To appeal to 100 per cent of available customers, businesses will have to retain high intensity sanitation schemes.

To do that, and to ensure their hotels remain profitable, businesses need to start thinking now about how they can manage these cleaning costs. Whether it be through sourcing, by prioritising certain parts of the process, or by regionalising your management efforts, managing these costs now can put hoteliers in good stead for the future.

When the time comes that consumer confidence has rebounded and these businesses can determine what the new normal looks like, by having done the work now to discover what is necessary and what is not, they will be positioned as first to determine what travel truly looks like in the aftermath of a pandemic.

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