Executives cite challenges of cost control “Executives cite challenges of cost control”
Hotel News Now http://www.hotelnewsnow.com/article/14658/Executives-cite-challenges-of-cost-control Hotel News Now, October, 2014

Article Summary

While speaking at the 20th annual Lodging Conference, hotel executives made it abundantly clear that the two main causes for concern were the rising costs associated with construction and labor. Noting the financial crisis of 2008-9, many of the construction companies which provided the building mechanism before the downturn, have now either gone out of business or moved on to other sources of business, such as the booming oil industry. This leaves a gap between the need to build as the economy rebounds and the ability to do so due to the lack of contractors. This has also driven up the costs associated with building as the demand increases as those contractors that remain, increase their pricing model. While refinancing projects helps with some of these cost increases, the more effective way to deal with it is to ride out the cycle until the contractor market bounces back.
The continuing debate and in some states, legislation, the costs associated with increases in minimum wage are squeezing hotelier’s bottom line. The uncertainty which accompanies this pending legislation has caused them to begin passing these increases on to the customer even before the legislation has passed. Most of the executives speaking at the conference expressed concern about their ability to compete when their margins are being pressured by high labor costs. Until a middle ground can be found, lower end service may have to be cut back, again passing the buck to the consumer.
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