It seems like a long time ago, but not that long ago, the hotel industry in the United States was hitting record highs. Occupancy rates in all types of properties were the highest in years, and many hotels decided it was an excellent time to increase their average daily rates (ADRs).
However, we all know what happened next. By March, the drop began, and by June, occupancy rates were at the lowest levels in years. Many properties, large and small, closed. The goal was no longer to make money but to save money and stay open.
However, according to real estate advisers RCLCO in a new report, the hotel industry has reached the bottom or is nearly there. The only direction it can go now is up, even if the rebound is slow.
According to the report, segments of the industry may begin to see a rebound in 2021. But some industry sectors, such as larger business and luxury hotels, may see only slight improvements next year.
Business Has Moved Online
The biggest challenge for these properties is the proliferation and acceptance of online meetings. The relative success of virtual meetings has resulted in fewer companies feeling the need to send their people to distant hotel meetings, summits, and conventions.
However, those hotels that emphasize being green and sustainable may be a step or two ahead of other properties once the bounce back begins, especially compared to full-service, business, and luxury hotels. Here are some reasons why:
Lower rates: Full-service hotels emphasize amenities and luxury, for which they charge more. Higher rates are an obstacle right now. While certainly comfortable, many green hotels tend to be smaller, limited-service properties, offering fewer amenities and luxuries, allowing them to charge less.
Reduced cleaning costs: The added amenities of full-service hotels generally mean more items are touched, used, and need to be cleaned. Plus, full-service hotels tend to be larger properties with more areas to be cleaned and maintained than green hotels. Cleaning is a significant expenditure for hotels and drives up operating costs, giving the more streamlined green facilities another advantage.
Fewer staffers: Full-service properties typically have more people available to interact with guests—providing directions, making reservations, arranging travel and future accommodations, and so on. Green hotels often have fewer people on staff, a cost savings, and right now, most guests would prefer having fewer “points of contact” with hotel staff.
Green suggests healthy. This is much more than a marketing mantra. Ever since the green hotel movement began more than 20 years ago, one of its main driving forces has been consumers’ belief that a green hotel is a healthier hotel. In most cases, it is. This has often been related to cleaning, as consumers became more aware of how traditional cleaning products have the potential to impact human health negatively.
Green implies sustainability. While green and sustainability are not the same, most people do bundle them together. And they certainly do work together. More and more hotel guests, especially millennials, are very sustainability focused. This is one more reason they would prefer to stay in a green hotel.
Protecting the Green Advantage. Many of the benefits green hotels have when compared to not so green hotels are that they have lower operating costs. However, just because a property is green does not mean it will realize these cost savings.
For instance, many green hotel managers may not be aware that the ways green products are purchased can have a noticeably significant impact on cost savings.
Let us take green cleaning supplies as an example. Very often, these products are purchased as needed, with staff often going online. What staff should be doing, and what can help ensure that cost savings materialize, is to have a procurement program in place, instead of purchasing.
The Purchasing/Procurement Difference
At this point, you may ask, are not purchasing and procurement the same? No, they are not, as we shall explain.
Purchasing is an act. We are buying a green cleaning product from an online catalog or placing an order for a product we have purchased before.
Procurement is a program. Working with a janitorial distributor, we know we want to purchase environmentally preferable products and help promote sustainability. However, within these parameters, we are also looking for products that are:
- The most cost effective;
- High performing;
- Can replace other cleaning products, so we have fewer products to purchase;
- Can be quickly delivered;
- Includes one or more “Plan B”s.
Plan Bs come into play when a product is out of stock, something that many green hotels experienced with the pandemic. With a Plan B, we already know other suppliers for a green product or similar products that cost and perform about the same.
An effective procurement program typically requires the help of a janitorial distributor. Some use online “dashboards” to compare products as to costs and performance. They may also be part of a national association, so if a local distributor does not have a product, another member in the organization likely does. This makes the entire process, and the building of a procurement program, much easier.
Green hotels do have an edge when it comes to their evolving re-opening. In general, they can operate more efficiently and cost-effectively. However, it just does not happen; there must be a plan. Developing a procurement program, as discussed here, can help ensure they have a green edge.
Michael Wilson is AFFLINK’s Vice President of Marketing and Packaging. He has been with the organization since 2005 and provides strategic leadership for the entire supply chain team. In his free time Michael enjoys working with the Wounded Warrior Project, fishing, and improving his cooking skills. He can be reached through his company website at www.AFFLINK.com.
