Keep Your Waste Disposal Costs Under Control

Keep Your Waste Disposal Costs Under Control.

By Tim Johnson
Friday, 31st August 2007

Waste management is entrenched as the least exciting aspect of the lodging industry -

Aside from the obvious unpleasantness, waste disposal is a comparatively small expense and is often thought of as, “out of sight, out of mind.”

Even so, the nascent green lodging movement has taken trash and recycling from the loading dock and parking lot and into the executive offices. There, the movement has quickly established itself as a viable way to control costs, enhance guest satisfaction and improve occupancy.

While the economic benefits of going green are straightforward, the difficulty in executing a green lodging waste initiative boils down to the fact that it can be time consuming. While there are many resources advising hotel operators what to do, there are few resources who can actually step in and do it, saving managers time and money and helping them avoid missteps along the way. Consequently, this low hanging fruit is often ignored or abandoned after a couple of false starts.

To help stay on top of waste disposal costs, you need to do the following:

Remove Automatic Renewal Language In Your Contract

Standard waste vendor contracts include language that automatically extends existing rates and terms if certain notices aren’t properly given within a stated window of opportunity. Failing to give the proper notice means you forfeit your opportunity to improve rates and terms. To combat this, immediately send your vendor notice that you are canceling this language by certified letter, return receipt.

Don’t Rely on Competitive Bidding As Your Primary Cost Control

While competitive bidding may get you a decent price, it doesn’t guarantee you the exact service that you need. Haulers will ask what you have now and bid on that. Rarely will they spend the time to conduct a customized needs analysis for you. If you have an eight-yard dumpster, but really need a four-yard dumpster, getting a good price is meaningless because you’d still pay twice as much as you should.

Periodically Monitor the Waste Industry

Ask an administrative assistant to do an Internet search periodically. If a hotel operator had searched earlier this year, he’d be forewarned that the largest companies in the waste industry, like Waste Management Inc., and Allied Waste Systems, are focusing on return on capital, much of which is coming from price increases.

Don’t Buy Into the Myth Of ‘National Purchasing Leverage’

Waste disposal pricing, and the vendor’s costs, are largely a function of the distance from a property’s dumpster to the vendor’s nearest landfill. So while “purchasing leverage” does entail some discounting, it is really a misnomer for administrative simplification, where the hotel operator leaves money on the table in exchange for time. In particular, hotel operators who work with waste brokers sacrifice transparency and control because they no longer see the actual waste and recycling vendor invoices. This gives the waste broker the opportunity to operate with, and profit from, an additional margin.

Don’t Accept Price Increases Without Question

Waste vendors prepare for a percentage of their customers to refuse their price increases using actuarial techniques. Also, the sales managers instruct their staff not to lose any business over a price hike. So the next time you’re notified of a price increase, be sure to call them up and challenge it.

Be Clear on How Waste Bans and Laws Impact Your Costs and Liability

The bulk of a standard waste hauler agreement is language that limits their liability. Your vendor will not advise you nor guide you with respect to waste recycling requirements and regulations. You alone are responsible to ensure compliance and know that your hauler may provide services that expose your organization to financial risk and other penalties simply because it’s cheaper for them to operate that way.

Capture and Recycle All Valuable Commodities

There’s big money in selling cardboard, cans and plastic, so recycling service costs should be lower than those for solid waste. Managers should verify that the lower cost structure is passed along to them, not pocketed by the hauler. If there is space for one or more recycling containers, separating recyclables from waste should be carefully considered. Composting should also be considered for larger properties. Operators can reap community service and publicity benefits by considering local options for recycling like nonprofits and small businesses.

Identify and Correct Problems With Waste Collection Equipment

At larger properties, compactors are the equipment of choice. Like everything else, they require periodic maintenance, but it’s most often up to the hotel operator to ask for a checkup. Compactors should have working, accurate pressure gauges so staff can accurately monitor capacity. If you don’t have a pressure gauge, demand one from your vendor. In either case, it’s advisable to have an independent third party verify that the compactor’s pressure limit switches meet the manufacturer’s specifications. If they are lower than spec, you’ll pay for more frequent pickups, which makes your hauler more money.

Tim Johnson is president of Madison, Wisc.-based Midas Management Consulting LLC. Midas is a cost recovery and containment firm that specializes in no risk, performance-based expense reduction services for small and mid-sized businesses. Go to Midas Management Consulting or write to timjohnson@midasmanagementconsulting.com.