Walking the halls, meeting other attendees and watching sessions at last week’s Lodging Conference in Phoenix, the general sentiment pointed to an industry that is back firing on all cylinders.
Brands are back to launching new prototypes, developers and designers are coming out of the woodwork, and even buyers are navigating complicated debt markets and scouring for deals. After all, the industry has proved fairly resilient. If COVID couldn’t derail us, what’s a little recession going to do?
Perhaps the only thing holding the industry back is the nagging threat of rising operating costs, namely in the labor and distribution departments.
On the labor and staffing front, companies continue to struggle to find the right people, retain talent, and find ways to offset spiking wages. These challenges hinder hoteliers’ ability to grow and add constant pressure to the bottom line.
Several speakers at The Lodging Conference outlined the importance of tackling rising operating costs head on and shared best practices that have helped them operate more efficiently.
Flexibility is Key to Efficient Operations
In a June 2023 AHLA survey, 82% of hoteliers reported being understaffed. But a lack of interested workers in the market is only part of the problem – hotel operators today are struggling with attrition and retention, as well as rapidly rising wage demands. Today, a housekeeper demands a higher hourly wage than a front-desk agent, in many cases.
Wages at Atrium Hospitality are up about 30% across the board since pre-pandemic, although growth has moderated recently, said President Rob Mangiarelli.
“We’ve made great productivity gains since before COVID and we are probably 20% more efficient than we were in 2019. The challenge is: We’re 3% less efficient than we were last year,” Mangiarelli said. “Part of that is the recovery in food and beverage, and part is the brands reinstituting the daily clean that we had moved away from. The bottom line is that our productivity is starting to slip on top of that muted wage growth.”
“The numbers are getting better. The number of open positions within our organization has come down significantly,” said Jay Shah, executive chairman at Hersha Hospitality Trust. “But do we have the right people in the right roles? Maybe not today.”
Hotel operations leaders on several panels pointed to new strategies to introduce flexibility for line-level employees. Flexibility, they say, is key to attracting and retaining workers.
“Gigging,” or providing workers with flexible and alternative schedules to accommodate other commitments, is almost a must. In this environment, contract workers can swap shifts among each other more easily and choose to pick up shifts for several different hotel operators at once. The same goes for daily pay at the end of each shift.
Aimbridge Hospitality is working toward gig scheduling across its portfolio, said Global President Mark Tamis. At Highgate, CEO Arash Azarbarzin said employees have the opportunity to work four 10-hour shifts instead of the traditional eight-hour shifts.
“We need to be more flexible. We need to be able to say, ‘You can work in housekeeping today and stewarding tomorrow and banquets next Thursday,’ and that’s OK,” Mangiarelli said. “And then we need to be able to pay them every day.”
Hoteliers are searching for solutions to help them automate much of the tedious work done in a hotel back office.
“Leverage technology wherever you can, wherever makes sense, wherever it doesn’t impact your guest experience,” added Martin Schellenberg at Entegra. “An online booking system for your restaurant, online delivery, all the things that we’ve learned from other segments, we can leverage to be more efficient.”
A Culture of Talent Development and Retention
Many speakers agreed that one way to attract workers from outside hospitality is to promote our industry as one where workers can enter low on the totem pole and quickly work their way up into successful leadership positions.
G6 Hospitality CEO Julie Arrowsmith pointed to her Director of Brand Performance, who started a housekeeper, as an example. Mangiarelli, like many, said his first role in hospitality was as a night auditor.
Equally important as attracting new employees, leaders suggested developing talent in-house by cross-training and promoting from within.
“At the end of the day, this is a people business that can be fun and fulfilling, and we need to be focused on promoting that,” said Rehan Zaid of Prominence Hospitality Group. “So, one of the things Prominence is working diligently on is building that culture and educating folks that there is security here long term. To talk to them and understand where they want to be in the next 5 to 10 years. If you have that intangible piece covered, the profitability will come.”
“How do we create a career pipeline for line level employees?” asked Jyoti Sarolia, CEO at Ellis Hospitality Group. “I have an auditor who started with us part time and now she oversees HR. Her former team members see that she now gets to be part of the C-suite. I think you have to teach your team that there’s a possibility.”
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