For a long time, the hotel industry has been obsessed with guest data — constantly trying to optimize and curate every experience to maximize engagement and revenue. Hotels invest millions of dollars collecting this data, and while that remains important, it often overshadows an equally critical area: back-of-house (BOH) data.
BOH data, including procurement, inventory and operational costs, goes largely unexamined. Yet, this hidden gap holds the key to unlocking real efficiency and profitability.
It’s well past time to hyper-focus on the operations side of hotels, at least as much as we do guest management. The industry needs a hard reset, shifting attention toward delivering the best guest experiences in the most cost-effective way possible.
A great guest experience starts with a smarter back-of-house
To understand why back-of-house data is so critical, consider how it directly affects the guest experience.
Hotel guests today expect seamless service — from spotless rooms to well-stocked amenities and top-tier food and beverage offerings. But the entire guest experience quickly falls apart without efficient back-of-house operations.
When guest data is the only consideration, there’s too much emphasis on front-end preferences and not enough on back-of-house teams and how they can support and engage those offerings cost-effectively. If you’re overly concerned with front-end experience, you forget about the back-of-house efficiency that actually delivers it. That’s where you’re missing out on massive opportunity.
To remain competitive, the industry is getting very granular about the guest experience, including types of food offered in the hotel restaurant, the rooftop bar experience or even offering a unique outlet like a speakeasy. For each of these ventures, the back of the house is step one — creating the menu, the cost of ingredients, engaging the staff and the ultimate profitability of the offering.
Ignoring back-of-house data is costing hotels money and eroding profitability
Beyond delivering a seamless guest experience, back-of-house inefficiencies come with a financial cost that too many hotels overlook. While guest-facing analytics drive decision-making, back-of-house operations remain largely reactive, leading to missed savings and inefficiencies.
One of the biggest inefficiencies in the industry is manual procurement, where chefs and general managers spend hours shopping across different vendors. Instead of comparing prices, they often default to their usual suppliers — unaware that costs fluctuate daily — leading to missed savings and overspending.
In many cases, hotels fail to take advantage of real-time pricing, further inflating operational costs. Instead of leveraging data to optimize purchasing decisions, procurement remains a static, time-consuming process.
For example, a hotel might charge a guest $500 per night, but the fixed cost to service that room — utilities, linens, paper goods — remains around $50, whether the room is occupied or not. Despite this, there has been little focus on optimizing these costs to maintain margins.
These inefficiencies don’t just affect day-to-day operations; they directly affect a hotel's bottom line. Labor costs continue to rise, but room rates and menu prices aren’t increasing at the same pace. This imbalance forces hoteliers to rethink cost control and operational efficiency; otherwise, profitability erodes.
Hotels that rely solely on revenue from guest experiences without optimizing their back-end operations risk shrinking profit margins. Yet, too often, the attention remains on guest experience, while back-of-house operations are treated as an afterthought.
AI and automation are driving immediate cost savings in hotel operations
Fortunately, technology offers new solutions that help hotels control costs without sacrificing service quality. By leveraging back-of-house data, hotels can significantly reduce costs, improve operational efficiency, and enhance guest experiences without compromising quality.
Automation eliminates tedious manual tasks, freeing up valuable staff time. Instead of manually processing invoices, a task that can take seven to eight minutes per invoice, automation reduces it to 30 seconds, saving six to eight hours per month that can be redirected toward guest service.
Technology allows hotels to be proactive instead of reactive, particularly when it comes to inventory management. For example, artificial intelligence can analyze existing inventory and suggest new recipes using ingredients already on hand, reducing waste while maintaining creativity.
The impact on procurement costs is also tangible. A hotel could save hundreds of dollars on a single 30-item order simply by allowing AI to shop across all vendors instead of defaulting to one supplier.
AI will soon be the backbone of back-of-house operations
As AI and automation become more sophisticated, hotels that embrace these tools will be better positioned for long-term success.
The next major shift in hotel operations will be the widespread adoption of AI-driven procurement and inventory management. In the coming years, hotels that optimize their back-of-house processes will gain a competitive advantage by maintaining strong margins despite rising costs.
This change is coming full force in the next three to five years, and by that time, most hotels will operate with some kind of AI-driven procurement and inventory management. Manual input will disappear, and decision-making will be increasingly automated.
Hotels that resist change will remain stagnant, while those that embrace technology will scale smarter and maintain profitability while becoming ‘future-proof’ in the process.
While guest data will always be a priority, hotels must recognize that back-of-house data is equally vital for long-term success. Without operational efficiency, many of the best guest experiences become financially unsustainable.
The smartest hotels will take a dual approach: Hyper-personalized guest experiences paired with hyper-efficient back-of-house operations. The question isn’t if they should leverage back-of-house data — it’s how quickly they can start and who their right partners and services should be.
James Hansen is vice president of business development at Reeco.
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