Award Winning Lodge Utilization Solution (CS156a)

A multi-faceted lodge cost reduction initiative provided both material and sustainable cost reductions for a $50Bn business

This story is for executives who:

• Are entering into negotiations with third-party lodgings suppliers

• Want detailed cost of ownership models to assist with those negotiations

• Want to be confident that they have accurate, real-time information about lodging occupancy and allocations

The Challenge

This company is one of Canada’s largest Energy Companies. Their lodging operation services the diverse needs of their vast lodging community. At its peak, the company had room capacity of 14,000 in 15 lodges in the Woods Buffalo region against a total capacity of 12, 286 rooms in Calgary’s hotel sector as a whole.

The company’s management recognized their operating model was not clearly defined or robust enough to support an operation of such magnitude. Following previous successful engagements with ground transportation and aviation, leadership asked Maine Pointe to assist with their Lodge Cost Reduction Initiative to address field logistics effectiveness and efficiency by developing a clearer service model, improving service, and providing both material and sustainable cost reductions.

Helping optimize lodge capacity

It soon became apparent that our client could not accurately see utilization at lodge level. They were using a ‘black book’ system which didn’t provide accurate real-time information on allocation or occupancy.

This meant they were dependent on room contingency buffers, as a result of which lodging were getting poor negotiated results from third-party hotel and accommodation owners: Maine Pointe deployed a solution that included:

• Benchmarking to show total cost of ownership
• Developing a model which addressed and improved utilization rates
• Developing a capacity optimization tool to model the most cost optimal strategy for assigning personnel to lodges
• Creating a real-time room inventory tool so our client knows exactly what’s happening in every room, every night, an initiative known as ‘Heads in Beds’
• Improving collaboration and communication with third-party stakeholders • Enabling our client to develop a clear-cut strategy for owned resources
• Clarifying areas of responsibility in our client’s team to prevent any overlaps and increase accountability
• Implementing a cross-functional team management operating system

The Results

Maine Pointe was instrumental in developing and implementing a multi-faceted lodge utilization solution. This was a key component in our client’s award winning Lodge Cost Reduction Initiative.

• Immediate cost reduction $11M
• Increased visibility enabled client to change its contractual arrangements with vendors with forecasted savings of $5.2M
• Lodge asset reduction, optimization and reservation approach forecasted to deliver savings of $8.4M
• Understanding cost-of-ownership enabled client to negotiate $4M in contract savings by eliminating annual cost inflators and modifying the vendors’ scopes of work

Lessons learned for other executives

• You can have full control over lodge occupancy and allocation.
• Accurate cost-of-ownership modeling is a powerful tool in negotiations with third-party providers.