Hotel owners face rising operational costs to keep up with new coronavirus cleaning standards. While some technology platforms could trim labor costs, these offsets aren't expected to hit until tech-savvy business travel returns.
Cleanliness may be next to godliness, but it is also top of mind for hotel companies looking to win back travelers and market share coming out of coronavirus shutdowns.
But post-pandemic cleaning regimens come at a hefty price.
Global brands like Hilton and Marriott down to independent hotels have all responded to coronavirus with heightened cleaning and safety standards to give guests confidence to book a stay. While it is still early in these efforts to pinpoint an exact cost on operators, hotel management company Hotel Asset Value Enhancement estimates the range of new cleaning protocols could collectively cost the hotel industry as much as $9 billion each year due to higher frequency cleanings and new materials.
The figure averages to $30,000 in added materials for a 150-room hotel at a time when operators are already grappling with low occupancy rates and depleted revenue.
“I think everything is material right now,” said Kate Walsh, dean of the Cornell University School of Hotel Administration. “Expenses are borne by the owners of the properties, and those owners are really trying to be liquid enough to survive this. It all matters, but everyone is willing to make the investment because we have to.”
The HotelAVE study estimates a bulk of added cleaning costs will come from the higher frequency of cleaning public spaces, new supply costs like disinfectants and personal protective equipment, and the longer time required to clean rooms between guests.
A housekeeper will need an additional five to seven minutes on average for room turnaround between stays due to the heightened safety and cleaning measures calling for greater focus on high-touch areas, according to the report.
Uncertain Cost Tradeoffs
Analysts previously indicated digital efforts like contactless check-in could potentially offset higher cleaning costs by reducing some labor at a front desk. That would theoretically lower the $9 billion figure from the HotelAVE study, which did not mention any cost offsets.
But as the travel industry flickers back to life from pandemic-related shutdowns, the initial wave of guests aren’t always the type to use contactless check-in. Given the uncertainty of when the business travel sector — the kind of travelers most likely to use mobile room selection and check-in features — rebounds, it is hard to factor in any cost offsets, Walsh said.
“We’ve looked at doing a virtual check-in but didn’t see as much takeaway on that as we’d anticipated,” said Simon Mais, an executive vice president of operations at EOS Hospitality. “People still like to stop in at the front desk, particularly in the resort destinations. It’s different for corporate travelers.”
EOS Hospitality, which owns a variety of East Coast hotels and resorts, rolled out a contactless platform trial by sending guests at its Kennebunkport Resort Collection in Maine a pre-arrival text message with a link to go through the check-in process. Upon arrival, the guest would pick up a sanitized package with their room keys.
But leisure travelers to the Maine resorts haven’t favored contactless check-in as much as the company anticipated. EOS still plans to roll out contactless check-in, predicting guests at its urban hotels like the Hamilton Hotel in Washington, D.C., would use it more than those in resort destinations.
Mais estimates any cleaning cost offsets will actually stem from how housekeeping now typically cleans rooms between guest stays rather than daily servicing during a stay.
While housekeeping during a stay is still offered, it is by request only. Only 10 percent of guests at EOS’ Kingston Resorts complex in Myrtle Beach, South Carolina, have requested housekeeping during a stay since the measure was enacted, Mais said.
About half of the guests at the company’s Isla Bella Beach Resort in Marathon, Florida, still want housekeeping during their stay while only 20 percent at Ocean’s Edge Resort & Marina in Key West are making the request.
“Operationally, right now we’re still kind of waiting to see how it is all going to play out,” Mais said.
Heightened cleaning protocol cost analysis today is still largely anecdotal, as implementation is still in early stages. Many hotels in urban areas remain closed and haven’t ramped up operations.
But there are some early signs the cleaning programs are already impacting operational costs.
Costs from operating supplies, which include cleaning materials and now PPE like masks and gloves, were up a little more than 15 percent per occupied room in May, according to hotel data provider HotStats.
“Any uptick in cost is going to be pernicious on the bottom line,” said David Eisen, the director of hotel intelligence and customer solutions at HotStats. “When your revenue is so slight right now and your profit margins — if you have any — are already thin, this is just going to make it more difficult to turn a profit for owners. But they almost have to because it’s what guests and employees expect.”
EOS Hospitality is trying to be as cost neutral as possible at its properties with its own new cleaning standard rollout, but Mais said it is too early to get an exact financial figure on any of the changes.
Many hotel companies have acknowledged some elements of their new cleaning standards would be temporary.
“The other thing you have to keep in mind is, at some point, if there’s a vaccine, although many of the cleaning and safety protocols are necessary today, they may be temporary as opposed to long-lasting,” Wyndham Destinations CEO Michael Brown told Skift earlier this month.
It could be difficult for EOS Hospitality — which is seeing a 10 to 15-minute addition on housekeeping turnaround due to increased sanitization measures — to hold onto some of its protocols when hotels are back at full occupancy, Mais added.
For the time being, operators may have no choice but to incur some degree of added cleaning and operations costs to win guests over.
“This will pass at some point, and I just think hoteliers need to grin and bear it for a while,” Eisen said. “If you want to win market share right now, this is a good way to do it. One bad review on TripAdvisor is going to be a death knell for a hotel. They can’t afford any bad publicity.”
Photo credit: A variety of new cleaning measures hotels are implementing in response to coronavirus could cost the industry as much as $9 billion a year, according to a new report. Pxfuel