Remington Hotels president details how to use technology and minimize the cost of deliverables to guests to find efficiencies and improve ROI.
Most every hotelier was riding the rising tides of business in 2021-22. In 2023, however, winners will more likely be defined by how they best control costs, manage rates and drive new business to deliver exceptional GOP.
For Remington Hotels President Chris Green, first and foremost that means leaning into and trusting technology to match or beat 2019 results. “We have to be very efficient with managing energy costs, the way we operate F&B, how we communicate with guests, reducing the full-time employee (FTE) count at the front desk, improving our housekeeping paths – all of those things are going to have to happen to have the same GOP because we have inflationary costs on wages and goods.”
Dallas-based Remington is budgeting for a 5% to 9% increase in the cost of consumables, while capital items for renovations could soar from percentages ranging from the high teens to low 20s.
In response, Green said as Remington heads into 2023, its primary focus is on minimizing the cost of deliverables to guests while meeting guests’ expectations, and then managing the return of FTEs and minimizing contract labor across its 125-hotel portfolio. “We have done a great job of combining roles using technology to limit the need for FTEs. However, the value of FTEs surrounds enhancing the guest experience and the ability to drive the top line,” he added.
Technology also plays a crucial role in F&B as Remington now produces about 70% of its center of the plate items using sous vide cooking technology. Green said it reduces kitchen labor by about 50%, aligns purchasing that aids inventory control, and still delivers what he calls a great product. It has been fully implemented in about half of the Remington system and those hotels are running about a 400-basis point delta on labor cost and a 300-basis point delta on food costs. On the beverage side, Remington is running between a 500- and 600-basis point delta on costs.
Energy management also has become a major priority for Remington this year. Green said operators need to look at every contracted service and buying opportunity. In fact, Remington now has one person heading up energy reviews for the entire portfolio. “We also have our regional teams doing efficiency audits on our equipment (kitchen equipment, gas usage) because those of you that have been operators like me know that an inefficient air handler can cost you 30% more,” Green added.
“Pull all these levers; run great F&B; hang on to your rate gains; be aggressive on your customer acquisition; make sure you’re selling to groups and small groups; and make sure you’re getting your customers from the most affordable channels.”
Chris Green
Green noted that balancing motors on compressors and pumps can help them run 15% to 20% more efficiently after getting attention. “Older pumps and older systems get out of balance and run inefficiently. By improving the efficiency you can see a throughput of 10% to 15% on your energy cost,” he said. “We have 125 hotels and six regional chief engineers. If they go do their audits and identify, for example, opportunities for improved efficiency on water reclamation systems and chilled water recirculation systems, that can add up to a 3% saving. Then you’re talking real money that doesn’t affect the guest experience.”
As housekeeping service begins to creep back toward pre-COVID levels and some of the big brands suggesting everyday cleaning again, Green said Remington is meeting brand requirements, which usually means no less than every other or every third day. “The feedback we’re getting is most guests are okay with every other day or every third day. They really understand it. A lot of guests have changed some of their needs determinations. So, I think optionality is critical.”
But perhaps one of the biggest questions of 2023 is how long rates can keep rising while services are diminished? This year will be the truth teller, Green said. He said some hotels are starting to see minor fall-offs in occupancy as travelers begin to question the value proposition. “But I’m going to encourage everyone to stay the course because we’ve done a great job as an industry through this pandemic. We have a valuable product, and we need to treat it as such,” he said, adding that every market is as strong as its weakest link. “We just can’t take the bait because I think this year there’s going to be an inflection point. People are starting to see pressure… We just can’t flinch.”
Remington-managed Sky Rock Sedona in Arizona
When asked for parting advice, it was simple and straight-forward for Green: “Pull all these levers; run great F&B; hang on to your rate gains; be aggressive on your customer acquisition; make sure you’re selling to groups and small groups; and make sure you’re getting your customers from the most affordable channels. Don’t go out to OTAs unless you have to as direct selling is for sure an opportunity.”