CUC should do all it can to be more efficient

By Lynn Knight

The following is a transcription of an interview conducted with Lynn Knight, who is the president of the Hotel Association of the Northern Mariana Islands and manager of Century Hotel.

Century Hotel is a small hotel. We have only 33 rooms, a 24-hour Shirley’s Coffee Shop, and a game room, and the impact of the fuel surcharge is really a lot. I would say it’s about $1,800 more a month than what we were spending before. For small businesses, that’s really a lot.

In fact, I’m working with my staff to try to find out ways that we can reduce other expenses anywhere possible. I’m very happy that last year, we invested in energy audit. We had a consultant come in and do an energy audit so that gave us some ideas for how we could conserve and we’re trying to implement as many of them as possible. We’re trying to turn off the air conditioners more in rooms that are unoccupied. It’s challenging because when the guest checks in, we want to make sure that they’re comfortable immediately, so we can’t turn it off completely. We have to time it just right.

We have also been looking into buying some energy-efficient light bulbs. Unfortunately, they are very expensive. So we’re trying to source a wholesaler for those. We need to replace about 500 light bulbs, so it’s a big expense. We have also made some electrical upgrades to ensure that we don’t have any problems with supply. We have also upgraded our generator to an automatic-start generator, so that if the power goes off, or if there’s a CUC power outage, it starts up automatically so there’s no disruption for our guests. That was a big investment.

I don’t have any survey figures for what the fuel surcharge costs the industry. Based on what I’ve heard from the other small hotels, the fuel surcharge is costing them an extra $1,300 or $1,500 a month, depending on the number of rooms. These are just little properties. I can imagine big ones—$30,000 a month maybe. I can only guess, based on the size. We all have to be prepared to self-generate at any moment, because you can’t let it go dark. If CUC power goes out, you have to have a generator that turns on right away. You have to keep fuel supply in the property and that fuel cost has been going up.

WHAT CAN THE GOVERNMENT DO?

One thing that people don’t understand too is that the hotels have a very big expense for generating water. I would say most of the major hotels have their own reverse osmosis systems—those are very expensive to maintain—and they use power. So this is very high cost of running hotels. Not only do you have to have your own capability for backup power, but you also have to provide your own water. That is one area that I hope the government could resolve as soon as possible. If they could reduce the cost of producing water, that would really help. It would save probably millions of dollars a year for the industry.

Along with Alex [Sablan] from the [Saipan] Chamber [of Commerce], I have tried to study the fuel surcharge. Quite honestly, as a layperson, it’s hard to understand the whole issue because there are a lot of technical things. But I’ve tried very hard to go all the briefings I was invited to, so I could try to understand and talk to the HANMI members about the issue. From what I can tell, the issue of the cost of the fuel, it doesn’t seem like there’s a whole lot we can do about it. The price of oil per barrel just keeps rising and that’s a fact of life. But what I think we can do more is to drive efficiency within our system.

On the business side, I’m doing everything I can as a hotel manager to try to find ways that we can conserve and look for efficiency. I think that CUC should also be doing that. They should be looking at every and all little shred of efficiency that they can find anywhere to bring their costs down. Do they have waste anywhere? The common perception is that they do. If they can remove any waste whatsoever, they can help ease the burden. They have told us that they have 25 percent line losses. That seems high. Could they bring that down to 10 percent? If they did, that savings could be very substantial. Personnel-wise, do they have the right number of personnel? Is everybody efficient in their jobs? Are they doing their billing efficiently? Are people paying their bills? Is everything as efficient as it can be? I don’t know the answer to that. I would be willing to bet there’s more efficiency there that can be contributed to help bring costs down.