Running a hotel means walking a financial tightrope. Inflation, labor shortages and rising prices squeeze your margins, while maintaining high guest satisfaction still reigns supreme. And let’s face it: one bad stay can ripple across review sites, directly impacting your revenue.
So, how do you keep costs in check and guests happy? Modern hotel management software is your secret weapon. It gives you the power to eliminate inefficiencies through automation and create smoother stays, without sacrificing the service your guests expect.
In this article, we’ll share:
It’s a fact: Hotel operating costs are climbing, and guest expectations are changing. Nearly 60% of consumers say personalization would increase their likelihood of brand loyalty, but only 40% give hospitality high marks in this regard. It’s clear that there’s growing demand for more tailored interactions.
As traveler expectations change, hoteliers must adapt their operations accordingly—or risk losing out to competitors. Managing this alongside rising costs is a balancing act, but you don’t have to do it blindly. When you understand the factors driving your expenses, it’s easier to build a clear framework to evaluate what’s essential to creating a good guest experience (and what’s not).
The internet hasn’t just made travel more accessible; it’s also reshaped how people plan and experience their trips. Online reviews are the new word-of-mouth. Social media drives destination decisions. And amenities that once set hotels apart are now considered the bare minimum.
Hospitality professionals have long felt this shift, and now there’s data to prove it. Deloitte found that millennials are 71% more likely to expect their hotel to “surprise and delight” them compared to other generations.
This generation of travelers also expects autonomy. According to Oracle Hospitality, 73% of travelers want to manage their stay from their smartphones, including checking in and out, paying, ordering food, and more. Additionally, 39% prefer that every standard hotel interaction is fully contactless. Hospitality has entered a new era, and now it’s up to hotels to keep up.
Simultaneously, the AHLA’s 2025 State of the Industry report found that hotel operating costs are rising faster than revenue. Expenses across operations, maintenance, sales, marketing and IT each jumped roughly by about 5% in 2024. On top of that, hotels are expected to spend nearly $128.5 billion on wages and employee-related costs in 2025.
With profit margins dipping an average of 1.2% year over year, hoteliers are feeling the squeeze. As guest expectations grow and business-as-usual gets more expensive, it’s increasingly difficult to balance service levels and spend.
It’s clear: your guests expect excellent service, personalization and autonomy. But when costs become a concern, the temptation to cut corners in these areas may be hard to resist. When hoteliers think of how to lower spending, they often think of:
Sure, these lead to a short-term boost in profitability…at the detriment of long-term success. A happy guest may become your biggest advocate, but when service falls short, the reviews are sure to spread.
And negative reviews hurt. Not only do 87% of travelers reduce spending when brands cut service, but nearly half will also share that experience with family and friends.
The good news? There are smarter, tech-forward ways to run your property more efficiently without sacrificing service. Modern hotel management software works to do this in a few ways. Mainly, it:
The right tools for efficiency at your property will depend on your size, guest demographics and goals, but every strategy should start with visibility. Let’s start with how to look at your expenses to pinpoint exactly where you’re losing money (and where you can save big).
When you know you need to cut costs, the first step is identifying where to start. But exercise caution! Cutting too deep in the wrong areas quietly eats away at guest satisfaction, team morale and long-term revenue.
The key is to evaluate each expense by its impact on your hotel, not as a simple number. As you work to understand your balance sheet, ask three critical questions about each line item:
If you’re interested in doing this exercise for hospitality asset tracking, here’s an example. Let’s say your hotel property is evaluating whether offering staff bonuses is a cost you can afford to cut. This is how you’d apply this framework:
Staff bonuses don’t generate income, but they fuel employee satisfaction, which results in better guest service. Better service leads to happier guests, who leave higher online ratings and become loyal to your brand. This mentality is what leads to holistic audits.
Once you’ve reframed how you evaluate costs, identify where your hotel is overspending. This is also a three-step process:
This may seem like a daunting task, and it does take time. However, digging into data is how you separate truly necessary expenses from those that drain budgets without delivering value.
When evaluating how to reduce hotel operating costs, you’ll need to go far beyond labor and utilities. From online travel agency commission to operating permit renewals, every dollar spent impacts your budget. If you haven’t yet made a comprehensive hotel expenses list (or haven’t in a while!), that’s the best way to see exactly where every dollar is going.
This section delves into examples of line items that may be costing you and how to solve for them.
Labor is usually the biggest expense at any hotel, but for good reason—your employees have an outsized impact on the guest experience, after all!
Staffing your front desk, housekeeping and maintenance departments is a vital expense. That said, recent reporting shows that it costs $9 more to staff a hotel room now than it did in 2023. That cost adds up when multiplied by dozens (or hundreds) of rooms.
Beyond the dollar amount of wages, hidden costs prevent hotels from maximizing how effective their labor spend is, too.
Hospitality has a notoriously high staff turnover rate, with some hoteliers reporting annual costs of $20K for housekeeping training alone. This represents a significant chunk of your hotel’s bottom line, without addressing the root cause of why employees leave.
How to solve:
When everyday tasks are more difficult than they should be, productivity suffers. Clunky software and inefficient processes make things unnecessarily complicated. Without the ability to work efficiently, friction abounds for staff and guests.
How to solve:
Communication makes the world go ‘round—especially in the world of hospitality. And not prioritizing it can be costly: poor communication is estimated to cost U.S. businesses $1.2 trillion annually! In addition to being expensive, poor cross-departmental collaboration leads to preventable errors, which is one of the fastest ways to tank the guest experience.
How to solve:
Hotel utility costs are one of the sneakier expenses. They often creep higher instead of jumping by large margins, so noticing extra hotel expenditures isn’t easy. And because US energy costs have risen by 3.6% (even outpacing inflation!), a rising bill may not immediately be a cause for concern. That said, inefficiencies at your property are an unnecessary driver of costs.
There are a lot of systems that keep your hotel humming along in the background, but how long have they been around? If your heating, cooling, insulation and plumbing haven’t been looked at in a while, they might be working harder than necessary.
How to solve:
Even if your appliances are relatively modern, inefficient systems and outdated routines also cause excess consumption. Laundry, lighting and plumbing practices that haven’t been reviewed in years might be overdue for a simple but impactful update.
How to solve:
Keeping your hotel comfortable for guests is a non-negotiable. But running AC units and lights while guest rooms are unoccupied is an unnecessary expense that adds up, especially in peak seasons.
How to solve:
Being eco-friendly is a great way to attract modern travelers. In a recent Booking.com survey, they found a whopping 76% of respondents wanted trips to be more sustainable! But that’s not all: Going green is also an opportunity to control hotel costs. Single-use items, unnecessary waste and poorly managed maintenance schedules all contribute to higher hotel expenses.
Single-use toiletries drive up hotel room expenses fast. In food and beverage, poor tracking leads to spoilage and unnecessary waste. Inefficient linen and towel replacement cycles, like swapping out lightly used items too soon, add labor and supply costs that could be avoided.
How to solve:
Your hotel needs a lot of supplies, so without solid inventory tracking, it’s easy to over- or understock. A lack of optimized purchasing processes for linens, amenities and other supplies keeps you from controlling hotel costs effectively and staying ahead of guest needs.
How to solve:
Skipping regular maintenance may seem like an easy way to save, but it often leads to more expensive fixes down the line. Controlling hotel maintenance expenses requires a proactive approach that goes beyond just reacting when something breaks.
How to solve:
The technology stack that powers your hotel is integral to operations, but inefficient systems equate to wasted time and money. It’s estimated that around 62 billion working hours are lost annually due to inefficiencies that could be addressed with better technology. If your legacy software isn’t working for you, upgrading is an up-front cost that leads to long-term savings.
Maintaining outdated hotel technology gets costly. Hotels often find themselves paying for overlapping tools, like multiple software programs offering payment processing or guest messaging.
How to solve:
When hotel software systems don’t integrate, manual processes waste staff time and add unnecessary operational friction. Non-intuitive interfaces also require more training and increase the risk of errors.
How to solve:
Lack of centralized dashboards and poor data visibility make controlling hotel operations harder. Older systems also pose serious risks around security and compliance, exposing hotels to data breaches, fraud or regulatory penalties, which result in unexpected costs.
How to solve:
If you’re still using manual processing, outdated payment systems and poor document tracking, you’re at an increased risk of fines, chargebacks and lost revenue. It’s estimated that every dollar lost to a chargeback costs up to $2.40! Tightening up financial and compliance operations is a direct way to control hotel expenses and protect your bottom line.
Bookkeeping, tax preparation and financial reporting may be dull, but they’re quite necessary! These processes are important, but when not handled well, errors are inevitable—and mistakes in this department are some of the most expensive.
How to solve:
Transaction fees and chargebacks quietly eat into profits, while outdated payment systems set you up for non-compliance fines. Handling guest data is a tricky business, but mishandling it is a risk not worth taking.
How to solve:
Protecting your property and staff is a good investment, but insurance is a recurring cost that often isn’t considered. Plus, legal consultations and contract reviews may be occasional, but they’re rarely cheap.
How to solve:
Hotels are subject to a long list of required permits and licenses. Missing a renewal or filing late can trigger fines or disrupt operations, so it’s key to track and account for these expenses annually (or on whatever cadence makes sense).
How to solve:
Marketing is essential for driving bookings, but between OTA commissions, ad spend, loyalty perks and sales expenses, overspending is easy. The key is finding the channels that work and tracking ROI closely. For example, around 29% of direct booking budgets go to social media on average—a channel that’s responsible for just 1% of marketing revenue.
OTAs bring visibility and bookings…at a price. Commission rates cut into profits with every reservation. Relying too heavily on third-party bookings means you’re not maximizing your revenue for each reservation.
How to solve:
Producing marketing campaigns that get eyes on your hotel requires both time and money. Without clear goals and tracking in place, it's easy to spend thousands on campaigns that don’t convert. Poorly optimized campaigns often result in low ROI and missed opportunities.
How to solve:
Reward programs help with guest retention, but incentives do carry costs. And if your program isn’t structured well, it may attract deal-seekers more than it attracts genuinely loyal guests. Costs can spiral if redemptions outpace the revenue those guests generate.
How to solve:
Sales teams are crucial for driving business, but they come with salaries, travel budgets and commission. Without a steady pipeline or performance tracking, these costs outweigh the revenue generated.
How to solve:
Operational inefficiencies don’t just hurt your bottom line. They also quietly and significantly erode the guest experience at every turn, from pre-booking to post-stay. Here are a few key ways this manifests:
No one likes to be kept waiting, especially guests trying to enjoy their travels. Whether due to staffing shortages, inefficient processes or legacy technology, delays at check-in or checkout create a poor impression that leads to guest frustration.
Even seasoned staff make mistakes when juggling admin tasks alongside face-to-face service. Manual data entry slows operations and increases the risk of costly errors that impact the guest experience.
Hotels manage large volumes of sensitive guest data, but many still rely on outdated storage methods. According to Cornell, 31% of hospitality providers have experienced data breaches. The financial penalties are steep, but the long-term reputational damage is even worse.
Guests expect consistency, especially if they’re repeat visitors. But high staff turnover and employee burnout often lead to uneven service. This results in a disjointed brand experience that erodes loyalty and guest satisfaction.
Operational inefficiencies abound in hospitality, but your property doesn’t have to settle for them. Most solutions make you choose between service quality and the bottom line, but hotel management software benefits both.
The right platform boosts hotel operational efficiency by digitizing, automating and personalizing—all of which work together to improve the guest experience. Here’s how:
Paper-based processes for registration cards or payment processes slow your team down and open the door for costly mistakes. Digitizing these tasks reduces the likelihood of manual errors and ensures guest data stays secure.
Repetitive questions and routine tasks eat into your labor budget, but they don’t have to. One hotel cut calls by 30% by adopting an AI hotel chatbot. Another slashed check-in time in half by letting guests check in from their phones. In both cases, staff saved time and got to focus their efforts on what matters most: great in-person service.
We’ve mentioned how guests expect personalized service, but it’s increasingly difficult to provide this at scale without the right tools. Hotel management software makes it easy to keep track of preferences, track booking history and guest behavior with just a few clicks, so every guest experience feels tailored.
It’s clear that a modern hotel management system improves the guest experience and staff efficiency. Let’s take a deeper dive into the value it brings, or book a demo if you prefer to see it firsthand.
Staffing shortages have plagued the hospitality industry for years, and the front desk is no exception. This significantly impacts the traveler experience from the start of the stay, and some research has even indicated a direct link between having adequate hotel staff and guest satisfaction.
By digitizing key guest touchpoints, hoteliers reduce the administrative tasks staff have to manage. The result? A front desk team that’s available to meet the in-person needs of guests without the distraction of paperwork or phones that ring off the hook.
What impression do you want to leave on guests with your check-in process? We assume it’s not “long wait times” or “lots of paperwork”! Traditional hotel check-in processes rely on manual steps that slow down teams, like paper registration cards or manually updating a PMS.
Fortunately, you have options! Many hotel technology tools offer solutions for every operational inefficiency related to hotel check-in, from wasted paper to wasted time. Let’s look at a few of these challenges and ways software helps.
Problem: Peak periods cause lines in the lobby, frustrating guests and overwhelming staff.
Solution: Give guests the option to take check-in into their own hands with a self-service kiosk.
Guest experience impact: Smoother arrivals, faster check-ins and happier guests.
Problem: Front desk staff have too many tasks to juggle, causing avoidable errors and lackluster service.
Solution: Reduce front desk work by up to 50% with mobile check-in software.
Guest experience impact: Streamlined administrative tasks let staff focus on the guests in front of them.
Hotel case study: How Waypoint Hotel Streamlined Front Desk Operations With Canary
Problem: Staff and guests spend more time on forms than they do interacting with one another.
Solution: Digitize your registration cards and save 700+ sheets of paper per month.
Guest experience impact: A modern, tech-forward experience greets guests from the moment they arrive.
Hotel case study: Mr. C. Coconut Grove's Sustainability Transformation with Tablet Registration
Make a great first impression every single time with Canary’s Arrivals Solutions. Book a demo to learn more about streamlining your front desk operations.
While many people associate data breaches with large banks or credit card companies, any business that collects customer data is at risk. And hotels are no exception. Hospitality businesses gather and store large amounts of data, often distributed over multiple systems.
Cornell research shows 31% of hospitality providers have reported data breaches, most relating to customer data. In the hospitality industry, the average cost of a data breach is an eye-popping $3.4 million. But with the right systems in place, you can significantly reduce the risk from this fallout.
Printing, signing and faxing payment documents should be a thing of the past, but for many hotels, it’s still standard operating procedure. It’s cumbersome and outdated, leaving guests wondering if they’re time-traveling on the way to your property.
Secure payment processes do more than bring your hotel into the modern age, too. They’re also essential for reducing chargeback requests and getting contracts signed quickly. This makes sure transactions get finalized faster and the revenue you make stays protected.
Problem: You’re risking up to 5% of your revenue by not screening for fraud.
Solution: Implement a digital authorization system to automate fraud checks and reduce chargebacks by 90%.
Guest experience impact: PCI compliance lets guests be confident that their data is stored securely.
Hotel case study: How Canary Stops Chargebacks at a Preferred Hotels & Resorts Member Property
Problem: Contract signing takes days to finalize.
Solution: Get required signatures in minutes with a digital contracts provider.
Guest experience impact: Reviewing and signing contracts is hassle-free.
Problem: Card-not-present transaction fees are eating into your profits.
Solution: Send your guests a secure payment link to skip the cost of keyed-in payments.
Guest experience impact: Guests can pay in seconds without providing their data over the phone.
Secure transactions, money saved and a solid bottom line…sound interesting? Book a demo to see Canary’s Secure Transaction tools in action.
We all know that human-to-human connection is what makes hotel experiences stand out. But how well does your staff provide that when they’re juggling so many things at once?
Providing exceptional guest service isn’t easy when admin tasks and multiple requests abound. The good news is that AI automates many of the routine inquiries hotel staff field and keeps in-person service uninterrupted.
Good guest communication is a struggle to do at scale. Managing both inbound and outbound communication is a lot for any front desk to take on, especially during peak season (or even just busier times of the day!).
Automated, AI-powered messaging makes it easier than ever to make sure guests have the information they need around the clock.
Problem: Guests can’t get the information they need before they book.
Solution: Place an AI hotel chatbot on your website to answer questions instantly.
Guest experience impact: Guests get answers in seconds and book with confidence.
Hotel case study: A 30% Reduction in Call Volume With AI Webchat at Trapp Family Lodge & Resort
Problem: Guests who call in get tired of waiting on hold, and you miss up to 40% of calls.
Solution: Utilize a hotel voice bot that answers every call instantly.
Guest experience impact: Personalized service is on demand whenever guests call.
Problem: Guests have a difficult time getting questions answered during their stay.
Solution: Explore a guest messaging solution that uses AI to intelligently address inquiries.
Guest experience impact: Any inquiry is addressed immediately or passed to the appropriate department.
Hotel case study: AI Guest Messaging: Automating 82% of Responses at Holiday Inn Express & Suites at Orlando's SeaWorld
Problem: Your staff is too busy to address guest needs.
Solution: Adopt Canary Hotel AI to scale guest communication across every medium.
Guest experience impact: Accurate information is at travelers’ fingertips 24/7.
Hotel case study: How LINE SF Uses AI to Free Staff Up for More Complex Tasks
Keep the lines of communication open automatically with Canary AI. See what it can do by booking a demo today.
Consider the majority of requests your front desk staff handles daily. Are most of them questions? If so, making information more readily available is the solution.
Whether guests are curious about hotel departure policies, nearby attractions or how to tip the staff, technology makes it easy to provide the right answers.
Problem: Guests can’t find key information about your hotel, like pool hours or restaurant menus.
Solution: Use a digital hotel compendium that guests can get from their own devices
Guest experience impact: Information is always accessible and easy to find.
Hotel case study: How Dream Inn Santa Cruz Keeps Guests Informed with Digital Compendium
Problem: Your hotel compendium needs frequent updates, requiring extra printing and labor.
Solution: Digitize your in-room booklets to cut paper usage to save time and money.
Guest experience impact: Compendium information is always accurate and up-to-date.
Give guests the info they need to enjoy their stay without any extra legwork. See how Digital Compendium offers a great in-stay experience by booking a demo.
Happy staff are essential to delivering amazing guest experiences. But with 65% of hotels reporting staffing shortages, overworked hotel employees are becoming the norm (often at the expense of service quality).
Motivating staff to go the extra mile isn’t always simple, so the right incentives make a difference. Offering guests an option to tip staff digitally benefits your employees and modernizes the overall guest experience.
Problem: Increased staff turnover results in understaffing.
Solution: Add digital hotel tipping to reduce turnover by up to 75%.
Guest experience impact: Experienced staff provide more consistent service, resulting in a better guest experience.
Hotel case study: How Digital Tipping Decreases Staff Turnover by 75% at Hotel 1620
Problem: Guests increasingly travel without cash, so they’re unable to reward staff.
Solution: Allow staff to 5x the number of tips they receive through digital tipping.
Guest experience impact: Guests get to thank staff for going above and beyond.
Hotel case study: How Linchris Hotels Boosted Employee Tips by Over $100,000
Problem: Rooms not being cleaned thoroughly result in a diminished guest experience.
Solution: Motivate staff with cash incentives to increase service and cleanliness scores.
Guest experience impact: Cleaner rooms, happier guests and happier staff.
Hotel case study: A 6 Percentage Point Increase in Cleanliness Scores at Hyatt Place Durham Southpoint
Book a demo today to see how Digital Tipping works to incentivize staff, retain top talent and improve your service scores.
Guests can’t add upgrades if they don’t know what’s available, and manual upselling means opportunities often get missed. That means lost revenue and guests who don’t experience everything your property has to offer.
Taking your upsells digital removes the friction. Guests see the right offers at the right moments, like room upgrades post-booking or late checkout the night before departure. And because it’s automated, every upsell gets offered every time.
Problem: Guests only hear about the upsell offers available at check-in.
Solution: Use a dynamic hotel upsell solution that offers add-ons at key moments throughout the stay.
Guest experience impact: Guests receive relevant add-on offers when they’re most effective.
Hotel case study: Over $450,000 in Upsell Requests at Gila River Resorts & Casinos
Problem: Your hotel offers many add-ons that guests aren’t aware of.
Solution: Explore a digital upsell solution that integrates with your other guest journey products to offer upsells at different points throughout the journey.
Guest experience impact: Easy access to available add-ons lets guests fully personalize their experience.
Hotel case study: Driving £10,000 per Month in Ancillary Revenue With Canary Upsells
Offering custom add-ons has never been easier. See how Dynamic Upsells generates ancillary revenue with a demo.
First impressions matter, but so do lasting ones. The last thing you want a guest to be left thinking of is an early knock from housekeeping or a long line at checkout.
Instead, offer a departure experience that’s as seamless as the rest of their stay. Let guests check out on their own terms, and capitalize on that moment to gather valuable feedback about their experience.
When guests check out, they’re usually on a schedule. Whether they’re catching a flight or just eager to get the next leg of their journey started, friction at checkout causes unnecessary delays.
Plus, without knowing when guests are leaving, room turnover slows down. This makes it harder to offer early check-ins that boost revenue and improve the next guest’s experience. Fortunately, a smart checkout solution has the solve.
Problem: Guests wait in the lobby to finalize checkout, causing lines and delays.
Solution: Let guests use smart checkout on their phone so they can drop their keys and go.
Guest experience benefit: No time waiting in line means guests have more agency over their checkout timing and experience.
Hotel Case Study: Dream Hollywood Guests Rate Smart Checkout Experience 4.92 Stars on Average
Problem: Confusion about billing at the end of the stay leads to complaints.
Solution: Offer eFolios with your checkout solution so guests can easily see their charges.
Guest experience benefit: Digital receipts make it clear what’s being charged and why.
Hotel case study: Eliminating Printed Receipts at Hotel Camiral
Problem: Housekeeping doesn’t know when guests leave and rooms are ready to be cleaned.
Solution: Find a checkout platform that prompts guests to enter their estimated departure time.
Guest experience impact: Less housekeeping downtime and more efficient room turnover let hoteliers accommodate early check-ins.
Hotel case study: An Improvement in Housekeeping Efficiency at the Coeur d'Alene Resort
Problem: Guests aren’t leaving reviews for your hotel on key platforms
Solution: Prompt guests to leave internal feedback during checkout and route them to Tripadvisor or Google if they leave a good rating.
Guest experience impact: A high volume of good reviews lets future guests book with confidence.
Hotel case study: How Ali’i Resorts LLC Used Smart Checkout To Increase Their Average Star Rating From 3.5 to 4.6
Make saying goodbye a little easier with Canary’s Smart Checkout. Book a demo today to see how it works.
Any solution you implement to improve your hotel operations is valuable, but the real magic happens when multiple products work in tandem. By identifying your biggest pain points, you can create a custom hotel tech stack that addresses issues directly. For example:
While guest-facing tech understandably has the biggest impact on the guest experience, other systems improve your core operational efficiency and streamline your service even further.
Intelligent hotel housekeeping management systems automate every aspect of housekeeping operations. They offer the ability to:
Clear, consistent processes let housekeeping teams deliver great service every time. And since housekeeping is one of the most mentioned topics in online reviews, it’s an area well worth the investment.
Managing your hotel’s inventory is a great way to eliminate waste and benefit from bulk discounts. An inventory management system takes some of the guesswork out of this with the ability to:
Well-managed inventory removes the likelihood of errors that impact guest service, like running out of key supplies.
Hotel revenue management systems maximize revenue by automatically adjusting room rates based on real-time demand, booking trends and competitor pricing. When a revenue management system is used, hoteliers get the ability to:
In an industry where perceived value is a major factor in the guest experience, pricing your rooms correctly can make or break your reservation quota.
Smart hotel energy management systems use sensors and automation to monitor and control energy usage across a property, optimizing lighting, HVAC and equipment. They let hoteliers:
Not only does energy management pave the way for new cost savings, but we also know that over half of all travelers care about sustainability in their accommodations.
Creating a streamlined guest journey is about more than just staying organized—it’s about providing the modern, tech-forward experiences that today’s travelers crave. To learn more about how Canary’s award-winning Guest Management Solution works, book a demo with us today.
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