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Cost reduction for tourism, hospitality & leisure

THL companies can expect to be under continued duress, but smart hospitality organizations with innovative and cost-effective programs will be able to increase customer loyalty and drive demand.

How can Deloitte help you navigate

1. Identify cost reduction opportunities

Most companies have adopted cost management as an ongoing discipline, yet their current approaches may not be sufficient to address the potential downturn challenges. Adopting a transformational approach that focuses greater attention on strategic, structural improvements can help deliver significant and sustainable cost savings.

Deloitte can help in identifying enterprise-wide cost reduction opportunities and managing cost reduction programs. We design and implement sustainable improvements to underlying cost structures, such as streamlining infrastructures, adjusting service delivery models and redesigning business models that help organizations prosper during an economic downturn by helping protect margins, capitalize on opportunities and capture market share.

Probing questions:

  • Have you decided how much cost reduction is needed?
  • Do you know where to locate your possible savings? Have you taken full advantage of all the cost levers at your disposal?
  • And what about your project portfolio?
  • Have you balanced short-term and long-term improvements?
  • How will you actively manage change?
2. Review your tax position as you adapt your business plans in the light of the current economic climate.

In addition to realigning your tax approach with your business plans, every area of tax currently paid should be reviewed for opportunities to:

  • Have you assessed how a review of your tax position could result in significant savings?
  • Have you identified key areas for savings around Corporation Tax, VAT and Employment taxes/Social security?
3. Look at variable costs

An economic decline creates an easing in demand and an increase in supply. This increases the customer’s leverage, but can also improve the THL companies leverage with its suppliers. The management team needs to aggressively challenge variable expenses, cost of goods, and transactional costs to enable them to offer more competitive prices and maintain margins that consumers will respond to. Some suggestions:

  • Partner and collaborate with suppliers to reduce shared costs.
  • There may be a window of opportunity to negotiate better long-term leases on commercial real estate as demand softens and real estate inventory grows.

Please contact Koen De Staercke for more information