Benchmarking operation and maintenance costs of luxury hotels

Joseph H.K. Lai, Francis W.H. Yik

Research output: Journal article publicationJournal articleAcademic researchpeer-review

33 Citations (Scopus)

Abstract

Purpose – Tourism is a pillar of the service industries in Hong Kong. Its growth entails quality hotel accommodations where cost-effective operation and maintenance (O&M) of their facilities are essential. A benchmarking study was carried out on ten luxury hotels with the aim of identifying the significance and performance of various O&M cost elements. Design/methodology/approach – A benchmarking club was set up for the practitioners participating in the study. A template was piloted and then refined for use in collecting data, which include the hotels' characteristics, their expenditures on maintenance and project works, in-house manpower and payroll, contract maintenance costs, and utilities costs and consumptions. Findings – Energy cost dominates the O&M expenditure of hotels. The cost for maintaining lifts and escalators constitutes a major part of contract maintenance costs. Larger hotels can enjoy a lower unit O&M cost. Research limitations/implications – Quality, age and occupancy rate of hotels are factors which warrant further work to investigate their effects on O&M costs. It is also necessary to study what cost-sensitive parameters are appropriate for use in normalising the costs of different trades of O&M work. Practical implications – It has been shown how a benchmarking curve can be constructed for identifying the performance of utilities cost. This approach can be taken to develop similar curves for benchmarking other cost elements, as well as other aspects including processes and values of O&M works. Originality/value – Sensitive O&M cost data are seldom disclosed. The study has overcome the difficulties with their collection and the cost benchmarks presented are useful references for hotel practitioners.
Original languageEnglish
Pages (from-to)279-289
Number of pages11
JournalJournal of Facilities Management
Volume6
Issue number4
DOIs
Publication statusPublished - 26 Sep 2008

Keywords

  • Benchmarking
  • Costs
  • Facilities
  • Hong Kong
  • Hotels
  • Maintenance
  • Operations

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Management of Technology and Innovation

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