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When it comes to utilities, water is often the poor relation to gas and electricity. The comparatively low cost of water supply and waste water management, coupled with an inflexible marketplace, has led to it being a little understood, little noticed line on many organisations’ P&L.
In the UK that is all set to change. The Water Bill, passed in May 2014 will revolutionise the water landscape in England forever. It gives hoteliers and other commercial or non-household water users the opportunity, for the first time to switch suppliers, negotiate their supply contracts (in terms of price and service level) and is hoped to result in improved customer service levels. For large, multi-site organisations, the move could also reduce administration due to a cohesive, consolidated approach to billing.
What’s driving this move? Ofwat cites climate change leading to more droughts and floods, increasing environmental standards and a fast growing population as key drivers for this initiative. The focus is all on water efficiency and this is sorely needed as significant risks to water availability have been reported. According to the Water Resources Group, global demand for fresh water will exceed supply by 40% by 2030.
Making less water go further will not only help to make the supply chain more resilient to future demands, but it should also help to reduce bills. For these profit-boosting impacts to be felt however, it’s important to get ahead. The open water market comes into force in April 2017 and that seems a long way off, but negotiations with water suppliers are scheduled to commence in October 2016 - less than 12 months from now.
For UK hoteliers to get the best deal, I cannot stress enough how important it is to be prepared - and that preparation needs to start now. We are encouraging hoteliers to get under the skin of their water consumption. Knowing the detail behind your bills - how much water you use, where and when - will empower you to enter negotiations with confidence and structure your water contracts in the most profitable and sustainable way. Hotels that do this are the ones who will see the greatest benefits from the market reform.
The problem is that much of this information is buried in what could be as many as 27 different water contracts if you’re a multi-site hotel chain. What’s more, all water companies have different charging mechanisms, making accurate price comparisons difficult at best. It’s a daunting task but a critical one, so where’s the best place to start? Here’s my advice:
With less than a year to go before supplier negotiations can commence, now is not the time to be reactive.