In the last couple of years, the concept of linen rental has been gaining traction in the region. The last year itself witnessed linen rental take on the hotel industry with a storm. In the previous month, we spoke about common misconceptions about linen rental. In this particular webinar, we dug deeper into them and discussed the challenges and value linen rental brings to the table. Experts from hotel and linen rental sectors talk about their journey and the path towards a more sustainable future in the market.
Here is an excerpt from the webinar.
Opportunities and challenges of linen rental
One often wonders why the concept of linen rental hasn’t picked up as much in the Middle East as it has in the west. Studies reveal that linen rental has more than 90% success rate in the United Kingdom. But even though the pick up of linen rental has been slow in the Middle East, the trend will eventually swing towards rental solutions in linen. David Stevens, Director and Founder of NewGen Business Services believes that there are some barriers to entry before you get there. The first one is that traditionally the Middle East follows in-house operation so generally hotels have on-premise laundries. The first first barrier therefore becomes to persuade people to outsource.
Most of the major players now choose to outsource so they won’t be building more central laundries or on-premise laundries. So if hotels can get the outsourcing principle and they trust the outsourcing company, it will be a major stepping stone in favor of linen rental.
Then there are factors like operational budgets - OPEX vs CAPEX. Linen rental falls under OPEX whereas customer owned goods will sit under CAPEX and OPEX budget. There are also certain dynamics between the hotel owner and the brand where you can have conflicting interests.
There is also a certain level of understanding that has to be developed in the hotel staff when it comes to their differentiated requirements. For example, is it important to have a certain Egyptian cotton for the bedsheet or can a simple crisp white sheet suffice?
The type of rental also plays a significant role in determining the decision of linen rental. Broadly, there are two types of rentals. You have the designated stock where the hotel can choose what they want but the laundry basically becomes a bank and rents it. You also have the pool stock where you definitely get the economies of scale because the laundry now is running less production lines.
“Despite these barriers, we are seeing some movement now and I think there is an educational piece to be done about why rental works and how it can become the solution. There’s still some work to be done,” says David.
The African scenario
“Africa, being the last frontier, promises a lot of opportunity,” says Brian Gacheru, Chief Executive Officer at Pristine Linen & Laundry Limited. What that means is that we are still having conversations around whether to outsource linen or not. As soon as housekeeping and hotels see the viability of linen rental, it’s going to pick up fast.
Generally, the Middle East and Europe do all the testing for Africa. The best practices are then implemented in Africa. The fundamentals in the business in all of these markets may be different but rental as a business has proved itself. The model has been in Europe for almost 60 years and is a buzzing opportunity for African hotels because it is tried and tested.
“The other opportunity in Africa is that there has been a lot of push by international brands to come into the market. So as of 2019, we were expecting around 2000 extra rooms. This was majorly pushed by international brands,” states Brian. This clearly shows that Africa is the next frontier for new models such as linen rental. Brian hopes that some of the local brands see this model in practice and adopt this service.
As far as the challenges are concerned, there are issues in educating the end user about how the model works. Conversations about how these processes happen must happen. Apart from this, the capacity of the laundry remains a challenge, particularly in Kenya. This capacity goes a long way in earning the trust of an international hotel brand.
Is linen rental really required in hotels?
Linen rental is a tried and tested model in other parts of the world but it’s still getting in the Middle East. There are some stark realities in the minds of housekeeping professionals where more education is required to clear the doubts that are in their mind to make this model acceptable.
“This is the way forward for the hospitality industry. The core business of the hoteliers is to bring the hedge back into the bench. They have to satisfy the customers. Linen management is one of the most cumbersome activities in the whole housekeeping function. If they can leave this to the professionals who can handle the solution, there is some peace of mind for the housekeepers and the housekeeping function to take care of the guests who are important for the business. Having said that, it’s not just the linen but also the laundry which processes the linen is equally important. So I would see the laundry industry as an engineering industry which needs to be handled by the engineering professionals. In terms of processing the linen, someone needs to know the textile, someone needs to know the chemistry of it, someone needs to know the processing inside the laundry so that you get a better result from the processing unit but unfortunately, this is missing in this part of the world. That’s where we are trying to chime in and educate the hoteliers and laundry operators by means of TRSA Association wherein the certification of the laundries is a must to bring in the best management practices in the laundry so that the linen gets processed properly - whether it is for customer owned goods or its the linen rental company’s goods,” says Narayanan Raghavan, CEO of Rent-A-Towel. He concludes that education is the key. Whether it's the hoteliers who are trying to manage their own goods or the rental company which provides the complete solution to the hoteliers, it is the knowledge, best management process and the certification that is required in the laundries to bring the level of industry where it is today.
Brian believes that it is not an absolute prerequisite for the industry to swing in the direction of linen rental but points out that it is a more efficient way of doing laundry and managing linen. He agrees that going the linen rental way can help a hotel focus on its core business - guest experience.
A housekeeper’s challenges
Laundry management is the biggest challenge in the entire laundry industry around the world. Being in the industry for more than 30 years and having worked in more than 16 international and local brands, John Manohar, Cluster Executive Housekeeper from J5 Hotels found that there are multiple challenges in the laundry management - CAPEX, OPEX, budget provisions, approvals, linen purchase, linen quality, to name a few.
Then in laundry, factors like the processes, the chemicals, inventories, everything needs to be taken care of accurately. It is certainly not easy. At the end of the year, linen damages, losses, stains and the task of purchasing new linen - everything comes with its own challenges.
Earlier, the hotel operators and owners did not face any financial or budget problems buying linen or going the traditional way. However, during the pandemic they have been increasingly looking for alternate ways to manage linen. In the present scenario, it is not easy for the hotel operators and owners to invest money and buy linen the traditional way. So without any major investment, linen rental is a good solution for linen management.
The transition towards linen rental
In the U.S, U.K and Europe, more than 90% of hotels follow a rental model. On the contrary, the Middle East shows a very low percentage. My estimate is that out of 145,000 rooms in the U.A.E, only approximately 10,000 rooms are on a rental linen model. The reason is that hoteliers in the Middle East were very luxury focussed when it came to linen.
Mr. John recalls a time when the linen management system broke down in his hotel for seven consecutive days in a peak season. It was then that he decided to give linen rental a try. In this manner, the linen rental services helped him resume operations back to normal. By the end of the month, he did not even see any major changes in the financial statements. This experience made him wonder if having an in-house laundry system was even relevant in the first place. He started studying the process more deeply. He found that smart rental has much more benefits for them than traditional in-house laundry.
John believes that these days in the Middle east, almost all housekeepers are well aware of the linen rental model. However, this wasn’t always the case. They are also looking for ways to evaluate laundry and linen cost vs rental cost. If the latter is cost effective, it becomes an advantage for the hotel. He concludes by saying that a rental modelis a good solution for linen management.
Tapping into the rental costs
If you take a standard room (bed and bath) with standard specs, the average rental per room works out to be around AED 9 to AED 12. This includes the required number of stocks, the wash costs, the logistic cost, the technology cost, to name a few. On the F&B side of it, the cost could vary between AED 3 to AED 4. As a general rule of thumb, if you take from the pool stock, the benefit to the laundry is about 20% and linen depreciation is about 15%.
This is the case even in the U.K, where almost 90% of hotels have taken to renting their linen, the underlying reason being cost effectiveness. Linen rental is the way forward because it is economically sensible for a hotel to practice.
This is an excerpt from the webinar, “Hotels going the linen rental way”. To view the webinar, click here.