The coming Spring Statement will adversely affect hoteliers, but all is not lost…
How hoteliers can optimise expenditure in key areas such as staffing and food costs, to help counter the impact of the coming payroll and tax increases in the Spring Statement
With the coming Spring Statement in April set to increase both national insurance contributions and the National Minimum Wage for employers, while cutting business rates relief, external forces are making it ever more difficult for hoteliers to feel in control of their destiny.
On April 6th:
- The rate of Employer National Insurance is going up from 13.8% to 15%. This applies to earnings above £5,000 per year, down from the previous threshold of £9,100.
- At the same time, the National Minimum Wage is being raised to £12.21 (from £11.44) for 18 to 20-year-olds and to £10 (from £8.60) for under 18s
- Business Rates Relief is being cut from 75% to 40%
These changes are being delivered in a budget that UK Hospitality Chief Executive Kate Nicholls warned could “risk bringing growth to a grinding halt.”
The result is more headaches and more costs for hospitality businesses. A bit like the weather, these factors are outside of your influence – but can make a serious impact on your bottom line. And the combination might feel more like the perfect storm than a light headwind with a chance of rain.
Headaches and costs for hospitality – but what can YOU do to mitigate it?
It might feel bleak, but there is a three step process which will take the edge off, and even put you into a more positive position for when the storm blows over and you can move forwards and drive growth more easily.
- Inform yourself. Understand the changes coming that you can’t control, and their impact, so that you can prepare for them.
- Take charge of the areas you CAN influence – the controllables. You can’t make the sun shine right now, but you can be ready for when it does, while battening down a few hatches for rainy days.
- Marketing – reach and then retain your guests. Marketing and encouraging loyalty have never been more important.
Financial planning ideas all hoteliers will be able to take on board with ease:
1. Adjust your rotas – as staffing accounts for up to 40% of your total outlay
With payroll costs and tax bills going up, a good starting point is to closely examine your rotas to make sure you have the right people and the right numbers on duty at any given time. Labour is the biggest operational cost for any hospitality business, costing up to 40% of your outgoings, so even small adjustments and savings in this area can make a big impact.
Labour deployment platforms like that of our integration partner Polaris Data help businesses optimise staffing levels based on demand forecasts. This ensures that the right number of staff are scheduled at peak times and helps hotels to save around 10% on labour costs.
2. Save up to 10% on labour costs with software such as Polaris Data
“Be smart with your scheduling and balance individual employees’ hours to keep NI down”
Polaris Data highlights how sites are performing and where resources should be deployed. The rota system also flags when someone is going to go over the National Insurance threshold and adjusts automatically to what contributions should be.
“This means you can be smart with your scheduling and even balance the hours between more employees to keep the NI contributions lower,” explained Head of Polaris Data, Jonathan Eve.
3. Watch your waste, review your menu and run a stock take – food waste amounts to £3.2bn a year!
Millions of pounds of revenue is lost every year in food waste, with the Waste and Resources Action Programme (WRAP) estimating that wasted food in hospitality amounts to around £3.2bn annually in the UK alone.
Therefore, now is a good time to review your menu. What works, what doesn’t, and what items are regularly left on the plate? This data will help you better understand what meals could be replaced or reimagined to reduce waste and costs. This is the ideal time to run a stock take to understand where you can reduce waste in stock and inventory.
“A fifth of waste is from food spoiling – so considerable efficiencies can be gained in stock and inventory,” said Jonathan. “The Polaris Quantum system handles menu management, stock inventory and procurement, saving you money and time.”
- Marketing: reach and retain your guests
Finally, while you can’t completely control customer behaviour, you are in charge of your efforts to reach and retain them. In tough times, your marketing is more important than ever. It is the other side of the cost equation, making sure you remain in your existing customers’ minds while working to attract new ones.
This is one area where Rezcontrol works with several other integration partners to make sure you don’t get left behind, in addition to our own booking engine, guest engagement, rate management and revenue management tools – all of which we have written about recently in our blogs.
- Make sure you’re visible everywhere you need to be with SiteMinder
- Maximise revenue from each and every room with RoomPriceGenie
- Tailor your marketing to every individual segment for greater uptake with FOR-Sight CRM
Loyalty is also vital, and if you can promote the fact that you are maintaining your prices, offering ‘saver deals’ – whether on rooms, tables or both – and anything else to keep guests coming back in straightened times, you need to promote it and can connect with providers such as Inspire Loyalty, who tailor loyalty programmes specifically for hospitality.
As ever with hospitality, the challenges come thick and fast but there is support at hand to help you navigate these times, and to take stock and stay in control of your business goals.
Not a customer? Call us on +44 (0)330 223 1456 or email sales@rezcontrol.com – you can also book a chat or contact us for a demo.