There are numerous opportunities for operators within the leisure and hospitality sector to reduce costs by becoming more energy efficient and more waste efficient. In this article we look at how firms could reduce their energy bills, how much it might cost and why it is becoming increasingly more important.
Operators are wasting thousands every year
Energy prices have continued on an upward trend in recent years; many operators know that they are spending too much on heating, lighting and other utilities. Food waste is also a big, but often overlooked cost. Did you know that on average a restaurant wastes 22 tonnes of food every year?
When you consider the additional tax costs through disposing that waste, the business could be spending as much as £2,000 extra on landfill tax. The standard rate of landfill tax a business has to pay is £82.60 per tonne. There’s big savings to be made.
Do many operators recognise how much they could save?
Martin Wilmott, Partner at Hawsons, noted: “Unlike a lot of businesses that shut down at the end of a working day, pubs and restaurants and, in particular, hotels, often need to work round the clock. Additionally, operators are understandably cautious about implementing energy efficient practices that may impact on a guest’s experience. That doesn’t mean efficiency practices can’t exist though, as more and more operators are finding out.”
“In a sector where profit margins are already generally quite low – and with the fast approaching National Living Wage and rising utility costs – operators are recognising that this is more important than ever before. Although energy costs may only be a small percentage of a hospitality firm’s turnover, it is a cost that can be reduced, and reducing it can make a big different to the bottom line.”
What non-financial benefits might a firm see?
“Of course the financial, cost-saving aspects of implementing efficiency practices are critically important. But, they aren’t they only benefits a firm might see. Becoming more energy efficient could help improve the firm’s reputation and help to bring in new guests. This is something we have seen time and time again, particular with the leisure & hospitality sector becoming increasingly more competitive.”
Where can firms become more efficient?
“Heating, lighting, refrigeration, water and food wastage are just some of the key areas where pubs, restaurants and hotels can become more efficient.”
What examples are there of firms becoming more efficient?
“Simple things like LED lighting should really not be overlooked. You might be surprised to see such relatively minor solutions generate big savings, particular over a number of years. Other solutions such as better insulation of baths or function rooms can bring much greater savings in a shorter space of time. Raising awareness and implementing small rules like turning off lights and closing refrigerator doors can also make a big difference. Definitely get your staff involved.”
How expensive are efficiency solutions?
“That really depends. LED lighting might cost a few hundred pounds (depending on the size of your firm) to implement, whereas eco-smart shower devices, biomass boilers or solar panels will cost a lot more. I would add to that, however, by saying that most energy solutions have to be seen as long-term investments. Energy efficiency projects may have high initial costs – depending on the level of implementation a firm is thinking about – but deliver lasting savings.”
“There are also potentially significant tax savings available that must be taken into account. Items such as lighting and electrical systems now both qualify for Annual Investment Allowance, reducing your tax bills!”
“I would stress, however, that the qualifying conditions can sometimes be quite tightly defined. You should always take advice in this area.”
More from our leisure and hospitality experts
You can find all of our latest hospitality sector news and newsletters here.
If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.
Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.
Martin Wilmott acts as lead engagement partner for a wide range of corporate and non-corporate clients in the Doncaster office, especially in the Legal and professional, agricultural, transport, property and construction, manufacturing, healthcare and hospitality sectors. For more information or advice on anything covered in this article please contact Martin on [email protected] or 01302 367 262.