Covid-19 impact: War on costs by hotels

Switching over to energy efficient equipment, looking at newer business verticals, rejigging business models, multiskilling of employees, terrace gardens are some to the tactics that hospitality industry is adopting to stay afloat after Covid-19 pandemic hit the economy hard.

With revenues going down while costs remained the same post Covid-19, major hospitality players have started looking inward at their costs and resorted to measures that would give them perennial savings.

"Cost cutting should not be like slicing a part. The philosophy should be holistic cost management," Sriram Seshadri, Founder and Managing Partner, Disha Consulting and formerly Partner and Managing Director, Accenture India told IANS.

At the 600-rooms mega five star hotel ITC Grand Chola a series of cost saving measures has been taken that would benefit the company for a long time to come.

"We have 14.6 MW wind power capacity. From the day we locked on to the wind energy, there has been a cost advantage," Zubin Songadwala, General Manager, ITC Grand Chola and Area Manager, ITC Hotels, South told IANS.

During FY21, the total net generation by the windmills were 2.15 crore units, of that 1.9 crore units were used for three ITC hotels in Tamil Nadu (ITC Grand Chola, ITC Welcomhotel Chennai and Coimbatore) and the balance 0.25 crore units are being banked, Songadwala said.

With the power advantage, ITC Grand Chola converted its boilers from diesel powered to electrical powered in July last year.

For the nine month period, the cost savings achieved was Rs 1.17 crore and the annual savings would be about Rs 1.5 crore, Songadwala said.

In the kitchen, gas ranges were changed so that cooking is done on radiant heat basis, which in turn results in even heat spread, quick cooking and cost savings, he added.

ITC Grand Chola also went in for a loop system for its chiller systems, heat pumps for hot water, backwash water recovery system, steam condensate recovery system and cold water condensate recovery system to save on its costs.

In order to provide safe breathing space by killing the pathogens in the air, ITC Grand Chola has gone in for ionised hydrogen peroxide system that is installed at its air handling unit.

"The safe air system was installed in February this year covering all the public areas, banquet halls and restaurants. The system was piloted in this property and will be replicated in other properties," Songadwala said.

With hotels being water intensive, the huge ITC Grand Chola with a daily water consumption of about 250 kilo litres (KL), is a zero discharge property. It recycles 225 KL of water for irrigation, cooling tower, flushing requirements and about 25 KL gets evaporated from the process.

"We have converted our diesel boilers to liquified petroleum gas (LPG) powered one, resulting in cost savings. Similarly, by installing a heat pump, the boiler heat is used in our laundry services," Prakash Jayadevan, General Manager, 167-room Trident Hotel part of the Oberoi Group here told IANS.

According to him, the property has started buying more wind power and also installed solar power modules to reduce its power costs.

Realising pandemic will be there for some more time and every line of expenses to be treated with critical care, Bhaskaran T. Menon, General Manager, Le Royal Meridien told IANS: "We decided to concentrate all occupied rooms to around 30 rooms on one floor and one section. This meant that we could save in power consumption. Alternative corridor lights were switched off. Cable TV was disconnected and the air conditioner in the closed rooms was programmed to run every alternative hour."

Renegotiating with the vendors, running the air conditioning plant every alternative hour, closing down seven out of nine cold rooms resulting in better control over perishables, use of vegetables grown on hotels terrace for associate's dining, optimum usage of hot water boilers and house laundry were other cost saving measures taken, Menon said.

"At Sterling Holiday Resorts, heat pumps were installed across the resort with an estimated short payback," Ramesh Ramanathan, Chairman and Managing Director told IANS.

"Going in for rooftop solar power for heat generation, use of energy efficient gas cooking range providing uniform heat, centralised kitchen for economies of scale were adopted," M. Venkada Subba, who runs Darling Residency and several restaurants told IANS.

As regards new verticals, ITC Grand Chola is focused on sports. The hotel hosts the IPL cricket teams that provides an occupancy of about 60-70 rooms. Then there are new verticals like staycation, home deliveries of food and others, Songadwala said.

(Venkatachari Jagannathan can be contacted at

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