Looking at the right data in the right context and integrating people-centric policies can help minimize one of the biggest drags on the P&L.
For hoteliers, any discussion about the bottom line moves quickly to “the labor problem”. But reducing this complex issue to a catchphrase is clouding the factors that need addressing to solve it, according to experts. Going past common assumptions to pinpoint the realissues affecting labor at your hotel may take a bit of investigative legwork and a penchant for data. But the answers are there.
Talking with Hotel Investment Today, Lindsey Goedeker, senior vice president of sales at Actabl, said it’s more crucial than ever to look at the data and identify the intangibles behind the numbers to optimize the management of your hotel’s labor force.
Hotel Investment Today (HIT): Let’s start by defining the “real” labor problem. What are the questions hoteliers should be exploring to really understand trends in labor expenses and management, and implement solutions? This includes contract labor inefficiencies
GOEDEKER: The problem in recent years was that the hotel industry didn't have a labor force; we lost so many people during the pandemic. Now we do. Head count is back and labor hours are as high as they've ever been. But, we still have a “labor problem,” It’s not about a labor shortage now. When the hotel industry lost workers during the COVID-related closures/slowdowns, it also lost the knowledge, experience, and commitment of the many team members who were deeply invested in the industry. Now we have quantity and hours back with our labor teams, but their productivity is down because it's a new type of talent.
Hoteliers have to take a more in-depth look at how that impacts their labor management decisions. Over the past few years, we’ve seen that overtime has gone down significantly. That sounds good, but the reality is that hoteliers swapped out the problem in a lot of areas. For example, contract labor is now through the roof. Not only can that add costs and inefficiencies, it can also negatively impact your overall labor strategy.
Overtime hours can be hours that you're investing in team members who want to grow with you or your company, whereas now the highest per-hour spend on wages goes to contractors. A lot of times those are individuals who may not have a long-term interest in the industry, your guests, or working for your company.
HIT: How can hoteliers increase retention by boosting team satisfaction?
GOEDEKER: It starts with understanding your team members and where they want to grow, and then giving them opportunities to do that. It’s about making sure that the team members you have see a future with you, and ultimately with the industry, and then giving them the ability to be successful. I think that's all any of us wants on a basic human level. If they don’t feel they can be successful, any more pressure to make them more productive without understanding those things wouldn’t be beneficial.
HIT: How can hoteliers create context for data to better understand comparative trends and make more informed, data-driven decisions?
GOEDEKER: My first suggestion is to make sure your assumptions are informed. I love nerding out over data and challenging a perception because perceptions are so much easier than actually understanding what's going on. You have to fact-check yourself on your assumptions.
...overtime has gone down significantly. That sounds good but…contract labor is now through the roof. Not only can that add costs and inefficiencies, it can also negatively impact your overall labor strategy.”
Lindsey Goedeker
You also have to stay competitive with the market so that you can retain your talent. Make sure you're paying appropriately compared to similar hotels in your city. You may think you have adjusted wages up a great deal. Do the comparative numbers bear this out, or were you starting out from a baseline that was further behind.
Finally, you can have more dynamic comparisons than just year-over-year. Maybe you're still comparing the same five data points, but now, you may need to know how you did compared to last month. How did you do for the most recent two months compared to the two before that?
Try understanding more varied time trends. Then, you can start to move the needle and understand your seasonality and the months where you can improve. It’s the ability to compare more dynamic periods, to try to understand something and then pull in other data points that lets you see the holistic ecosystem of your operations. It gives you a lot more insight than looking exclusively at the financials.
HIT: Why does equipment/FF&E maintenance need to be part of the labor/expense equation
GOEDEKER: When individual assets inside your hotel—HVAC units, elevators, and other such assets are inoperable, they become one of your largest expenses.
Right now, we're seeing that many assets weren't properly maintained over the past few years. It's not hard for anyone to understand why: hotels were closed and/or didn’t have staff. Now, they’ve become huge expenses to maintain. If something happens, like half of your elevator bank goes down, you're going to pay to have it repaired, and you're going to have to pay any overtime you need to because if you don't have the elevators running, your guests are going to be unhappy.
You can invest in mitigating those expenses by just making sure that you are taking care of your assets and that you are doing the maintenance that maybe you deferred for a while.
HIT: Why can’t owners/operators afford to overlook the human factor in labor management?
GOEDEKER: Everything that we do every day affects the P&L. But make sure you’re looking at the whole picture. Maybe you only look at a few key financial metrics, but then incorporate other information into that purview, like your associate engagement scores and your guest satisfaction scores and understanding the relationship between them. Those become really interesting conversations. Concentrating on building the relationships that expand the ecosystem of your teams and your guests and, ultimately, your profits.
Brendan Manley is a writer, editor and digital marketer specializing in hospitality content creation based in Warrensburg, New York.
The views and opinions expressed in this content do not necessarily reflect the opinions of Hotel Investment Today or Northstar Travel Group and its affiliated companies.