Running a hotel means managing an enormous amount of vendors, contracts, and services at once. Most operators are stretched too thin to audit every cost category with the attention they deserve, and vendors know it.
The result is predictable, and we see it for every hotel we consult with, especially for multi-property operators. You end up paying more than you should across nearly every major cost category because vendors strategically structure services to keep rates high and climbing.
Here are the top eight categories where we see the biggest overpayments and savings opportunities:
1. Waste and Recycling
Every hotel generates tons (literally) of waste, which should theoretically give you negotiating leverage. Instead, haulers load up contracts with extra fees beyond your base rates:
- Environmental charges
- Fuel surcharges
- Administrative fees
- Contamination fees
- Tipping fees
And so on. These fees can exceed the base rate itself, and they’re often adjusted at the hauler’s discretion with little notice.
We also tend to see hotels punished for seasonality fluctuations. Either they’re paying for extra pickups they don’t need all year, or their hauler charges extra for overflowing bins during the few months where extra pickups would be necessary.
2. Payment Processing
I can guarantee that your credit card processing rates have increased since your property first opened an account with your current provider. And there’s a high probability your rates have gone up in the past 6-12 months.
It doesn’t matter who your processor is because every provider follows the same blueprint.
Processors are constantly looking for unique and creative ways to pad their margins at your expense. Whether it comes in the form of hidden fees, deceptive billing, or annual rate increases, it all results in you paying thousands of extra dollars in processing fees every single month.
Additionally, processors make your statements extremely difficult to read. You’re looking at hundreds of transaction categories, each with its own rate, spread across a dozen pages.
Unless you know exactly what to look for, it’s nearly impossible to spot the legitimate charges from junk fees.
3. Telecom and Internet
Hotels often carry redundant services that unnecessarily inflate these costs.
Legacy landline infrastructure is maintained because “that’s the way it’s always been.” We also see multiple vendors with overlapping capabilities across telecom, voice, and internal communication.
Guest Wi-Fi adds another layer, as many properties use managed providers with long-term contracts. The pricing on these rarely reflects what’s available in the current market, and recognition will essentially never be initiated by the vendor (unless they’re raising rates).
4. Laundry and Linen
For properties using commercial laundry services, the “bulk” discounts often go unquestioned.
But if you look at how your costs have changed over time in comparison to your volume, most hotels see cost lines increase while volume stays flat.
Even if you’re handling laundry in-house, you’re facing different versions of the same problem. Volume is identical, but equipment costs, maintenance, water, energy costs, and even linen replacement costs are all going up.
This shouldn’t be written off as just a cost of doing business. Tens of thousands of dollars are being wasted that could otherwise be optimized.
5. Tech/Software
Increased SaaS spending has been impacting businesses in all industries over the years. But hotels are hit particularly hard because of how tech stacks have grown.
You’ve got property management systems, booking engines, channel managers, guest communication platforms, internal messaging systems, keyless entry systems, and likely dozens of other services. Many hotels also leverage managed IT providers for things like cybersecurity, backup and disaster recovery, and cloud services.
All of these have similar dynamics that drive overspending:
- Seat or license counts that are no longer accurate.
- Annual contracts that auto-renew before anyone assesses actual utilization.
- Overlapping tools with redundant capabilities across different departments.
- Vendors who raise rates at renewal, knowing you’re unlikely to switch providers due to integrated setups.
Your event sales department uses Salesforce, while hotel guests are managed on another CRM. Now the new VP of Sales at another location prefers HubSpot, and before you know it, you’re spending $60k annually just to track customers.
6. Insurance
Commercial property and liability insurance for hotels is expensive, and it’s legitimately complex. While you need adequate coverage for obvious reasons, the complexity of the underwriting creates conditions where overpayment is common yet hard to detect.
The biggest issue is that many hotels have been with the same carrier for years.
Renewals happen annually without any real market comparison. Your carrier is banking on this, so it’s easy to raise your rates citing vague reasons. When in reality, you get the renewal notice once per year, quickly glance at it, even though it seems high, but pay anyway because you don’t have time in the next 30-60 days to shop around.
Some properties are also over-insured for categories that don’t reflect their current operations. Or worse, you’ve got coverage gaps (despite rising rates) that only become visible once a claim is filed.
7. Facilities and Maintenance
Most hotels use a wide variety of vendors to manage things like:
- HVAC
- Elevators
- Fire systems
- Landscaping
- Pest control
The list goes on and on. And outsourcing to professionals is likely cheaper than handling everything in-house.
That said, these contracts are rarely competitive. They’re priced based on convenience because the provider knows you won’t be able to fix your own elevator or broken HVAC system.
Beyond the base rates, you’re often hit with “emergency” service fees and after-hours charges (which is when you need it most).
When to repair vs. replace also has significant cost implications that are rarely analyzed carefully.
8. Utilities
Energy costs are more controllable than most hotels realize. And it’s more than just installing low-flow shower heads, solar panels, or energy-efficient light bulbs.
Lots of these costs stem from your rate structure, which may not be optimized for your usage profile. If you’re on a default commercial rate plan, you may be paying higher fees on peak electricity draw instead of total consumption.
Water costs can increase due to undetected leaks, aging fixtures, and irrigation schedules that are set and forgotten about.
None of these is a single dramatic failure, but rather a slow overspend that creeps up overtime while never triggering an alarm.
Why These Cost Categories Are So Challenging For Hotels to Manage
The challenge with out-of-control expense management is typically structural, and most of it isn’t your fault. There are a several things consistently working against hotels here:
- Vendors design pricing, statements, invoices, and contracts in ways that are intentionally difficult to read.
- Each category requires its own expertise to audit (knowing you’re overpaying on waste removal doesn’t help you spot junk fees on a credit card processing statement).
- Auto-renewal clauses mean the window to negotiate is narrow and easy to miss while you’re focused on running the property.
- Seasonal operations create irregular baselines, making year-over-year comparisons harder to track.
- Multi-property hotel operators face this across every location simultaneously, often with inconsistent vendor relationships at each property.
The information gap is the biggest factor here. Vendors know their pricing inside and out, and you don’t. They’re counting on your lack of knowledge to protect their margins.
Think of it like this: If a gas station charged you $20 for a bottle of water, you’d instantly know you’re being ripped off. But if you’re charged $2,500 per month to back up your property data, do you have any idea whether that’s a reasonable price or not?
What You Can Do About This to Save Money
Recognizing the fact that you’re likely overspending is the first step. So if you’ve made it here, you’re already moving in the right direction.
Now you need to start a systematic audit across each category.
It’s important to treat each one separately. So I’d start with the first two or three where you’re spending the most money. For most hotels, that’s waste/recycling and credit card processing,
From there:
- Compare statements month-over-month to identify increases, new fees, and anomalies.
- Identify opportunities to eliminate fees and negotiate contracts.
- Don’t wait for renewals to start the negotiation process.
- Benchmark competitive rates before you negotiate (even if you have no plans to switch providers).
You need to treat your expense categories as ongoing management as opposed to one-time fixes. Even if you slash spending by 20% right now, those rates can easily creep back up to exceed your current rates within the next 12-24 months.
If you need help with this, reach out to our team here at the Cost Guards for a free audit. We can review your statements and contracts on your behalf, and then negotiate everything directly with your current vendors. So you save money without switching anything.