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Selling the Hospitality Market

Regardless of the size of your business or geographic location, the hospitality industry is a large and growing market for building service contractors. Examples of this market segment include hotels, motels, resorts, amusement parks and cruise ships. Some may expand this market segment to include large apartment and condominium complexes, hostels, drilling rigs, and private work camps. In the past this work was and is still primarily done by in house staff; however this is starting to change. A good way to get your foot in the door in this market is to offer specialty services that are costly and difficult for potential customers to do with in house staff because special equipment, skills or training is needed. This includes such services as window cleaning, pressure washing, landscaping, hard floor care, stone maintenance and carpet cleaning. Some contractors have had good luck selling daily maintenance service for common areas, kitchens and restrooms. Fire, water, odor and mold restoration services are seldom done with in-house staff, so these are good specialty services that can be offered to potential hospitality customers. Due to privacy and security concerns, the cleaning of guest rooms and office areas is generally done with in-house employees. Most locations will require criminal background checks on all workers assigned to their facility due to liability and security concerns. Workers should anticipate being under video and audio surveillance in all areas of a hospitality facility.

Take a look around your community for potential client in this market segment and then reach out via letter and in person to the general manager, owner or housekeeping director at each location to inquire as to how they handle the services you are able to provide. Another effective approach for penetrating this market is to get involved in local professional associations that have as members, management staff from local hospitality organizations; examples include the International Executive Housekeepers Association (IEHA), Association for the Healthcare Environment (AHE), the Chamber of Commerce and other local groups.

Bidding the Hospitality Market
You need to be willing to schedule the work on short notice and at the time of day that he fits the customer’s schedule. Late night scheduling is common for public areas, offices, restrooms, conference rooms and kitchens. Being hotels are open 24, 7. 365, the scheduling of floor and carpet care is normally done after 2:00 AM and before 6:00 AM. Regardless of the time of day or night, noise is a consideration as someone is trying to sleep.

Pricing for the Hospitality Market
Although cost is always a primary factor when bidding, the hospitality industry also places a lot of emphasis on quality, staffing, technical skills and flexible scheduling. You will need to be competitive in your pricing to land jobs in the hospitality market. I’d consider this type of work to be middle of the road for pricing on a commercial basis, not the lowest priced buyer, but not ones who don’t look for a good deal or the best price.

Depending on the geographic area, size of the market and the services you are providing, you will find billable hourly rates ranging from slightly below $20.00 per hour to slightly over $35.00 per hour. Labor costs shouldn’t account for more the 50 – 65% of your costs. Supplies and equipment shouldn’t account for more than 5% of labor costs. Profits will normally range from 12% – 25%. Overhead can range from 10% – 20% depending on what you include in this cost category. Productivity of the labor force will depend on the work being done, but to be safe, I’d suggest taking 10% – 20% off normal production rates due to unexpected interruptions, wait time, scheduling and travel requirements within facilities.

That’s it for this month. Keep it Clean out there.