Why Hospitality Venues Overpay for Energy
For hospitality operators, energy is unavoidable.
Commercial kitchens, refrigeration, HVAC systems, beer systems, lighting and long trading hours mean electricity and gas run almost continuously. Many venues operate from morning prep through late-night service, and some never truly switch off.
Because of this, energy becomes treated as a fixed overhead, like rent.
But it isn’t.
In practice, hospitality businesses are among the most commonly mispriced energy users in Australia. (You can see how we work specifically with venues on our Hospitality energy management page
Continuous Usage Creates a Baseload
Unlike offices or retail stores, venues have a constant minimum demand.
Even when the venue is closed:
• cool rooms remain on
• freezers cycle overnight
• beer glycol systems operate
• gaming rooms maintain supply
• air conditioning protects stock and equipment
This creates what retailers call a baseload, electricity usage that never drops to zero.
Retailers price contracts conservatively when they see 24-hour usage because they must hedge wholesale market risk. If they don’t fully understand how your site consumes energy, they add protection into the rate.
Venues therefore often pay for pricing risk rather than actual usage.
For larger gaming venues this is even more pronounced
Trading Hours Don’t Match Standard Tariffs
Hospitality also operates during expensive electricity periods.
Dinner service, weekend trading and late-night operation typically coincide with peak wholesale electricity pricing. Retail contracts often assume worst-case peak exposure, especially when interval data isn’t analysed in detail.
This leads to common mismatches:
- venues priced like 24-hour industrial sites
- restaurants priced like daytime offices
- multi-venue groups priced individually rather than as a portfolio
Portfolio operators can see the impact most clearly, which is why we typically structure procurement across all locations together
Renewal Timing Is The Biggest Hidden Cost
Most venues only review energy when a renewal notice arrives.
At that moment:
• supply continuity is urgent
• kitchen operations can’t risk interruption
• the decision window is short
So the business chooses an available contract rather than creating competition.
This is purchasing, not procurement.
Proper energy procurement instead analyses interval meter data, forecasts load behaviour and introduces retailer competition before expiry.
Each reactive renewal resets pricing assumptions. Over several contract cycles, small inefficiencies become a major operating cost.
Why Hospitality Groups Overpay More Than They Realise
Groups with multiple venues often expect buying power to reduce costs.
However, retailers frequently price each venue separately. The retailer cannot accurately forecast risk when sites renew at different times, so margins remain high.
When venues are procured together:
• demand becomes predictable
• load diversity reduces risk
• retailers compete harder
This is one of the main reasons larger corporate operators consistently achieve lower electricity pricing than independent venues.
Ongoing Management Matters Too
Energy isn’t only a contract decision.
Usage behaviour directly affects future pricing.
Equipment faults, refrigeration inefficiencies and abnormal demand spikes change how retailers view risk at the next renewal.
Using an energy management platform allows venues to monitor usage, identify waste and improve contract outcomes over time.
It effectively turns energy from a passive overhead into a managed operating cost.
The Takeaway
Hospitality venues don’t overpay because they choose the wrong retailer.
They overpay because:
• baseload usage is misunderstood
• peak trading hours are mispriced
• contracts are renewed reactively
• multi-site portfolios aren’t procured together
Energy is one of the largest controllable costs in hospitality, but only when it’s actively managed.
Once energy is treated like procurement instead of administration, pricing outcomes change significantly for pubs, restaurants and venue groups. Get an estimate now.
