Beyond Consumption: Why Your Utility Bills Keep Rising

Many tourism businesses assume a rising bill automatically means operational waste or higher consumption, completely missing the market forces shifting around them during high season. In this episode, Samantha Smits explains why prices for fuel, water, and electricity can surge for reasons that have nothing to do with how much you personally used, and everything to do with local demand and supply chain pressures. Learn how to separate unit usage from fluctuating market costs, track your true resource rates, and build a clearer tracking habit that keeps you in control of your margins even when external prices swing. 

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Transcript

SPEAKER_00 0:00

So listen, once you know your real price per unit, you're going to be in a much stronger position when you sit down with your suppliers, when you sit with your own financial department, when you make choices what to invest in next. Hi, I'm Clementus Smith and welcome back to the Sustainability Edge, the tourism podcast. No Yargon, no fluff. We're breaking down sustainability and especially how to turn sustainability in a practical tool that gives you more profit, more time, stuff that's staying, and a business you can be proud of. Let's get started. Hello, hello, and welcome back. Last episode we talked about the cost of panic buying or more of unplanned buying. And especially when your kitchen or your stockroom or your storage is almost empty during high season because things go for so fast and you end up ordering out of fare instead of planning. And today I want to zoom out from your own choices for a moment because there is another thing that is influencing all that's happening there. Something else that is pushing your bills up that has nothing to do with how careful you actually were. There is something that catches a lot of accommodations and two operators, owners, management of cards. No matter how careful you are with your gasoline or even diesel, water, electricity, food, anything you have in storage, and you see you still your bill, it's still going up. Of course, you expect it's with high C's and your capacity is higher. This whole argument we've been discussing before. But in this case, it is not necessarily because you've been using more, or not necessarily because there was a leak somewhere, but something slightly more obvious, but still worth to discuss. The price itself has moved. The price itself has changed. So think about the way you're already think about when you book a flight or you book a room yourself for business. Nobody is surprised that the flight will cost more the week before Christmas than a random week in April, except that's high season somewhere. We accept that prices move with the demand. Think about all the accommodations close to I to B Boleyn venue during the same dates. We don't even question that. We understand that it's part of business, but somehow when it's our own bill or for gasoline or water or when it happens to our own business bills every month or in different seasons, you feel like it's a mistake, you're not sure where it comes from, and it seems like something is going wrong, especially when you've ruled out that it's not a leak or that it's not something else. So your your whole area, your business, your destination, especially with high season, it everything gets busy at the same time. Everyone around you is buying the same things you are, and every property wants the same resource you want. Everyone wants to use water at the same time because the whole area, there's more people there. Everyone, when a lot of vehicles are being used, more gasoline will be requested, more diesel will be requested. So you understand during high season there's also more demand for specific resources that you're using. And especially if people, if there's like limited supply, where there's only a few people who have these things to sell, there's a lot of demand lending on a small number of suppliers all at once in the same few months. So please don't catch me on that one. But let's call it a crisis of the bombing that the USA is doing on Iran. And without diving into politics, I think everyone can see because the street of Hormos, if I pronounce correctly, has been closed, all the prices of tickets have been going up, the prices of filling up the vehicles has been going up. I see various places in East Africa where diesel doll runs out and you have to continue driving elsewhere to find your diesel. So I think now people can never realized that the supplier was super specific and that the demand was way bigger than the world can handle if one supplier, the Street of Hormuz, has closed. That's a very, very specific example. So no matter if it's also talking about gasoline, or if we're talking about water or your food, or a very specific test, like a very local example, if everyone has to get the same paper, or you can think about things that you have to buy quite often for your business. Suppliers will always respond the same way as any business, and even you have different prices for high season compared to low season. So when everyone wants the same thing at the same time, prices creep up. And sometimes it can be the supplier has to bring in fuel from further away, or in this case there's less available, with the example just gave from gasoline. Stocks can run low that are closer by. Sometimes it's also because they know they can charge more, because people to pay for it anyway. There's various reasons, but and that's why also quite often last-minute demands also come at a higher price, because more time is needed, more administration is needed, more facilitation can be needed in some places, if you know what I mean. So all of that it just comes at a higher price because at the back there is a higher cost, and especially when there's five other businesses waiting behind you for the exact same thing. So I already we have already handled the argument before about being when you're careless with your resources, when you don't track them, and also forth, and that you have to do that. So it's not a story about that. We're now talking about that the market around you keeps moving, it keeps changing, of course, if slightly some predictability between high and low season, but then still politics can come in, anything can change any day, uh, climate risks, anything can affect this, whether you are watching this closely or not. And once you look into that or accept it, the the question changes from what is going wrong? Why are my bills acting like this? You can actually look as what you can actually look better at what indeed what is happening to the price that you are paying, rather than acting from a position of being powerless. You start understanding this a little bit better. So think think about this example here for an accommodation. Let's think about a lodge that builds its monthly budget using the last month's price from when they went to the market, and they will have a comparable, I mean, they have like a per person price, so they can compare it to okay, now we have more people, so per person it will only be this much more. That should be easy to predict, right? But two months into high season, the actual bill turns out to be much higher and higher than they're predicted per person. So actually, per person it went up somehow. Not because they ate more, not because they had different demands or different diets, which is also perfectly possible, but the foods, the fresh food supplier, is now having to serve more and more businesses like yours while still having the same that they can offer. They're probably not producing more at that moment, so they end up charging more or having to work together with other suppliers or other farms further away to keep up with the increased demand. So you did not necessarily, I mean, it's this still is a perfect possibility as discussed in previous episodes. It's not necessarily that you've missed something or that there's a lot of waste, which definitely still often happens, rejected as well. In this case, it is just the price. So the market changed and you didn't keep up. It's for you important that you are aware of all the different reasons, and the market price can change, and there can be a waste waste touch or leak, and you have to at all times consider all of these. Think about a tourator that has the same daily fuel budget per vehicle all year round, but then during those busiest weeks all year in the main safari circuit, all those fuel stations are raising their prices, they run out quickly, especially now during the current time of the year, which we're almost closed, and simply all the operators are going to the same place in the same shot window, there's not enough. And the operators notice that the spends creeping up, even though they know, yes, just like with the Lodge example, we have this much more vehicles. We know that with the expected use per vehicle, this is how much should have been you been paid. And yeah, now you already hear me hinting to an upcoming section the difference between what has been paid and what has been used. And this is actually what you really have to dive into. I know that I'm jumping sections over here, but at this point, if you've listened long enough to me to this podcast, you know that I can have a tendency to do that. So in both cases, don't blame your team, don't blame yourself. I mean, only blame yourself if you don't consider that it could be and the waste leakage and the price, and don't always tie yourself blind on one option, consider all the different ones because then there's always an answer to whatever it might be, and just separate the two, what I was already hinting to separate how much you are using and what you're paying per unit for it. And this is really what I want you. And we're not done with the episode yet, but it's really something I want you to take away from this episode and what is the core argument, the difference with your use and what you pay per unit when you start measuring it. Because when you separate those two numbers, you can really see uh what is going on with your costs be uh beyond the things the argument I keep repeating. So if if your use stayed roughly the same, but you still notice that your price per liter or per unit it went up, that tells something different than when your use went up because we were talking about waste, and I just see uh this happening a lot, that certification schemes or anyone else or an auditor, there's so many instances where it is of value for you. I've discussed this in many episodes to measure what you use. But a lot of people I can see because they get invoiced in money, of course, so they measure this by the amount of money spent. They know I used this much shilling, I used this much dollar, I used this much euro in electricity this month. But they don't know the amount of what? The same for the fuel. They know exactly what was paid, but they don't know the amount of liters. And this is this whole point of separating, both are important to know. Of course the price you paid because that's leaving the account, that's what you have to serve for. But also the units, because you could technically have two months where you use the same amount of units, talking about liter, what, whatever, but the price can be different because the price is flexible, and that is the key argument I'm making here. So please, whenever you make this tracking, work with two columns instead of one. Not just the total bill, but the price paid per unit. So we're not even talking about liter per vehicle, we're not talking about kilo of food per person and so forth. These are also very important. Also use those in the column. But the price paid per unit, because then you'll see that every month, ha, sometimes every week, these things will be very different. And that also really controls and helps you make your decisions much better. So listen, once you know your real price per unit, you're going to be in a much stronger position when you sit down with your suppliers, when you sit with your own financial department, when you make choices what to invest in next, what to change in the company. It's just another point of data that helps you to guess less what's going on, but to know and to actually, if you compare your vehicle to a car, to steer it in the right direction. And I already told you a little bit how this ties together with sustainability. The whole point is the less you depend on, for example, a generator, and the more you rely on solar power or your own water that you catch rather than you have to gut from the net, or the less you get exposed to such price swings, because of course the more you waste something and the more you use something, as we said in earlier episode, that also comes with increased pricing. But if you don't also track how much the price is fluctuating, it will also not help you. Because I every time I say when I simplify sustainability and we look at the triple P from people, place and prosperity or people planet profit, whichever P you prefer, money is always a part of business because to sustain your business, you have to have a turnover and so forth. So that's why this is also a very important piece when we talk about how this even would relate to sustainability rather than generic business coaching. So reduce your dependence on this and be sure you know what is going on. And the whole mindset shift needed here. Oh, I think did I pronounce it correctly with the dashware? Mindset shift for the episode here. Stop assume that a higher bill automatically means you m used more. I definitely want you to raise that thought like hey, this means I could have used more, and that you look into it, but don't immediately assume a move on. Look into it if it actually means you used more or if the prices have changed. It's always key that you see which one of the two is it, and that habit will really help you identify the problems. Alright, I've now stated my case. If you want to look into the specifically for your business in your case, or you want to have a simple tracker, do check the show notes to hop on the call with me, find my LinkedIn, and we can look at it together. You will also find a resource that I recently have built. It's one of the blueprints that shows you the first three steps to take when you're interested to see what sustainability certification can do for you. Also check it out in the show notes. Alright, that's it. Thank you for listening and see you next time. Thank you for listening, and congratulations on investing your time today to think strategically about your future, to make sure you never miss a step to understand sustainability better, how to grow your competitive edge. Follow the podcast right now, and if this was helpful, please leave a five star rating. It will help other people like you to find these tools. I'm Samanda Smith, and I'll see you in the next episode.