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Since the start of the global COVID-19 pandemic, the hospitality industry has been rocked with a growing labor shortage matched with consistently rising labor costs. Considering that the cost of managing human capital is the highest variable expense that hotels experience, it is easy to understand the urgency management teams feel when it comes to overcoming staffing challenges.
To underscore this issue, consider that a recent poll of 13,000 U.S. job seekers found that more than 50% of former hospitality staff have no interest in returning to the industry even with the promise of a higher salary. According to the Department of Labor’s JOLTS Report, 4.3 million U.S. workers voluntarily left their jobs in August, accounting for 2.9% of the labor force. This gauge of workers' confidence is well above the pandemic-era low of 1.6% in April 2020 and topped the previous high of 2.8% set in April of this year.
Meanwhile, U.S. labor costs continue to increase. In 2021, the Employment Cost Index have increased year-on-year (YoY) to 2.9%, the largest gain since the fourth quarter of 2018, from 2.6% in the first quarter. Wages and salaries are up 3.2% YoY. This comes at a time when across the U.S. economy businesses are struggling to add jobs. There are few signs to show this combination of a labor shortage and rising costs slowing anytime in the near future. Challenges such as growing raw materials shortages and supply chain issues promise even more uncertainty and challenging business conditions on a global scale.
In these conditions, it is becoming more and more challenging to attract and retain quality hospitality staff. While many hotels and restaurants have been able to reopen, they are only able to offer a limited service capacity with lengthening wait times. This consistently challenges their ability to deliver a world-class guest experience 24 hours a day, 7 days a week. These challenges continue to grow, creating difficult working environments for the remaining hotel staff and making it much tougher to maintain profit margins.
How Hotels Can Be More Efficient in Today's Labor Market
Understanding the return on investment (ROI) of human capital is the first step towards overcoming hotel staffing challenges. Hotels must develop more cost-effective and efficient practices that lead to greater staff retention, customer satisfaction, and improved long term profitability. According to the Bureau of Labor Statistics, the Hospitality sector has an annual turnover rate of 73.8% - worse than ever due to COVID. In other words, more than 6% of staff will leave their job every month. Understanding the ROI of staff retention is essential for boosting (or even maintaining) your profit margins and business economics.
To figure out the ROI of improving staff retention, your organization will want to have a clear understanding of the following three key performance indicators (KPIs):
Human Capital ROI = (Revenue - Operating Costs - Employee Compensation) / Employee Compensation.
Training Investment Value = Total Training Investment Headcount.
Turnover Rate = (# of Separations / Average # of Employees) X 100.
Calculating human capital ROI demonstrates the economic benefit that best practice hiring, staffing, and scheduling choices will have on your business. ROI will improve when the other factors such as training investment value and turnover rate are considered. Together, these three variables help to create models that allow your business to be more efficient and resilient in the face of growing challenges such as a labor shortage matched with rising costs.
The good news is that there are many ways to overcome the current landscape of challenges that many management teams across the hospitality industry currently face. It’s time to rethink hotel management and enact data-driven solutions that allow your core business processes to be more automated.
The Effects of Technology on Hotel Management
Develop More Efficient Hotel Operations
Across the U.S., too many hotel decisions are being made based on inaccurate spreadsheet calculations and managers’ personal processes. This way of doing business may have worked in the past, but today’s environment is far too competitive. Hotels must implement data-driven decision making across every phase of operations. And smart, cost-effective technologies exist today that provide the real-time visibility that managers have long craved, matched with the ability to make adjustments on the fly, even when you’re not on site.
Beware - Not All Tech is Created Equal
Too many hotels rely on inefficient platforms and overlapping systems that obscure the full picture of operational expenses and opportunities. Your hotel operation is dynamic and fast-moving. The key to being able to develop the insights needed to better forecast and plan for future needs hinges on your ability to understand your operational costs and revenue in real-time. Instead of basing decisions on the popularity of staff or the guesses of middle managers, implement a proven system that optimizes staffing utilization.
In many cases, your hotel’s operations can be streamlined through the application of automated processes. Automation dramatically reduces the potential for human error by ensuring that every staffing decision, at all of your properties, is made with evidence-based economics. Enterprise-wide hotel software can help you with many details of managing hourly workers such as housekeeping, front desk, and maintenance roles, including staff scheduling, maintenance requests, timekeeping, and payroll.
Digital transformation allows your business to reduce non-productive and wasteful practices. Additionally, your enterprise hotel management solution helps you identify areas where guest self-service (such as self check-in and check-out options) will increase profit by reducing labor and even improving guest experience. Guests are increasingly looking for contactless and seamless service changes. By rolling out such services you meet their expectations and streamline your own internal processes.
Better Forecasting and Scheduling with Smart Hotel Technology
On any given day, your hotel operations require a specific number of staff to accomplish business in the most economic and profitable way. The number of staff necessary to drive your success might change due to varying factors throughout the course of a day, week, or month. Smart technologies and analytics allow your organization to uncover these trends and harness insight about your operations, so when it makes sense to change things up, your managers know when and how to adjust. Today, with artificial intelligence (AI), a great deal of guesswork has been taken out of staffing ensuring that your hotel is doing the right things to manage the ROI of its human capital at all times.
With so many of your hospitality staff members wearing multiple hats, it can be challenging to limit the potential for overtime hours (OT). While there could be times and places when it makes sense to pay out OT, 99% of the time OT is just an added expense that should be avoided through more dynamic scheduling, cross training, or both.
Ultimately, it may make more sense for your business to avoid paying out OT altogether so that you can better manage labor costs with respect to occupancy rates and profit margins. There is tremendous value in implementing a system that incorporates AI to help manage scheduling.
A good hotel management software will also make it much easier to resolve staff scheduling conflicts and better manage part-time staff. Automated scheduling processes ensure that your hotel consistently staffs the right employees, at the right times, 24 hours a day. Most hotel management solutions only look at labor costs. Those systems that actually look at the operations and incorporate that with the costs reveal the powerful insights schedulers need.
Ideally, your hotel would be much more efficient with a hotel management solution that not only considers cost variables but also measures operational efficiencies and worker output in a more dynamic and reflexive way. When you put all of these disparate data points together, you can be sure your hotel operations are consistently improving and becoming more profitable.
Improve Hiring Practices to Affect Long-Term Staffing
Your hotel operations are only as strong as your weakest links. While it may have been attractive to hire and retain low skilled workers in the past, your organization can benefit by attracting and retaining a better caliber of worker in the first place. Developing your hotel as a great place to work helps you hire and retain, and will also affect how guests and your community see your hotel. Delivering a great guest experience begins and ends with ensuring you have the right people in the right positions.
Part of hiring the best is attracting the best. You will not find awesome employees willing to begin their first day, let alone become long-term staff, if your current staff are complaining about your management online. Investing in proper onboarding, and making sure your staff feel valued, have fair workloads, and are individually supported will go a long way.
Onboarding for the Win
Introducing your newly hired employees to the expectations, behaviors and culture of your organization are the first steps to a successful long-term employee. Onboarding should contain not just policies and procedures, but opportunities to get to know their manager, meet co-workers, experience small “wins” early, and understand your company’s vision, mission and values, as well as the expectations of the brand you represent.
Simplify and standardize your hiring and onboarding with a software that is loaded with templates, digital workflows, and training opportunities to take new hires down the road towards being longtime satisfied and motivated teammates.
Ensure Staff Feel Valued and Fairly Compensated
Treating workers with respect, rewarding them with monetary and personal rewards, are just the start in valuing your staff. Be sure to share positive guest feedback, and make sure to recognize employees who demonstrate the kind of values, guest experience, and work ethic that you want to instill in others. Of course, you also need to pay them fairly.
Digital tipping kiosks and platforms are a great way to compensate workers for their contributions to your business. Evidence continues to show that guests who tip using automated kiosks tend to tip more than in-room tipping, and you have more certainty it goes to the right people. You may also be able to create ways to offer incentives for staff who do not normally receive acknowledgment or tips, depending on how your hotel places these digital tipping opportunities.
Adding these opportunities is something that activates and motivates staff. When they see their coworkers benefiting, your staff will be even more driven to provide the world-class guest services your brand wants to be recognized for.
Digital tipping is a solution that does not cost much to set up and leads to much more satisfied staff members that will spread the word.
Ensure Workloads Are Fair
When your hotel makes the switch to an enterprise hotel management solution, you will be able to distribute workloads much more fairly across your business divisions. This cuts through the favoritism that so many middle managers have used, to the detriment of your business and building a cohesive and unified staff. With the right technology, your staff will have a clearer understanding of their responsibilities. The data and reports can speak for themselves, removing the need for some complicated management discussions. As a bonus, this data can also help you with your compliance requirements.
Support Multilingual Staff
A modern hotel management software environment also makes it easier for your business to support the hiring and management of multilingual job applicants. A streamlined onboarding solution ensures that your staff members receive the training in the language they’re most comfortable with and can help them be productive much sooner.
Skill-Up and Cross-Train Staff for Enhanced Flexibility and Agility
The more flexible and agile your hotel operations are, the fewer people you require to complete core processes. Hotels that offer different amenities can benefit from staffing programs that encourage up-skilling and cross-training to get more productivity from a smaller team. This allows your organization to move different employees around to different positions based on the needs and economics of each day’s labor requirements. Being flexible also gives employees the opportunity to learn new roles, aiding in retention.
A robust hotel management solution makes it much easier for your managers to shift workers between different roles with different pay rates while focusing on the bottom line. In a more flexible hotel operation, housekeepers can be shifted to work as laundry attendants or breakfast staff as needed, even within the same day.
Instead of wasting time training staff for positions they will never take, an enterprise hotel management solution automates decision-making to ensure that these micro-pivots and schedule/assignment alterations optimize the day’s available labor pool. Because a smaller team gets more hours, and presumably pay, it can improve retention rates which reduce your total labor costs.
People will always be unpredictable but with the right operational framework, your organization will be better prepared to counter uncertainty with data-based decisions.
Effective Operations Lead to Much Higher Staff Retention Rates
You already know unplanned labor churn is expensive. Burn and churn rates hurt business operations and make it much harder to maintain quality. Your goal should be to keep the right hires longer.
Better recruiting, onboarding, training, management, and compensation leads to a more satisfied and productive workforce. This, in turn, leads to more efficient operations and staff who value your brand as a place where they are proud to go to work each day. Additionally, providing staff with reliable tools to do their jobs leads to better productivity and improves employee engagement and job satisfaction, which leads to better retention rates.
Today’s workers are less willing to suffer in jobs they dislike, working for ineffective management. The “great resignation” has affected hotels, and hospitality in general, especially hard. You must improve operational efficiency; adjusting how your business thinks about people is key to keeping occupancy rates and profit where you want them.
The American Hotel and Lodging Association (AHLA) is a nationwide organization that has worked aggressively to ensure hotel staff and guest safety through publicity, support literature, and sponsored initiatives. Their 5-Star Promise is one such initiative that asks hotel industry companies to pledge to enhance policies, training, and resources (including employee safety devices) to ensure worker and guest safety.
One of the key provisions of the 5-Star Promise is the agreement that all hotel staff will have access to panic button technology to ensure that in a risky situation, they can immediately call for help and give on-site security their exact location on a property. Today, implementing a panic button solution is a major opportunity for your brand to show team members that you value their safety.
Creating a safe, supportive, and efficient workplace helps everyone and positions your business for success not only today but long into the future.
Upgrade to Advanced Hotel Management
An advanced hotel management solution provides the visibility your management team needs to improve hiring, training, managing and retaining a higher caliber of staff.
In many cases, hotels today are trying to accomplish the management of their operations using a variety of different systems that do not provide the insights needed to take a holistic look at business operations and affect real system-wide changes. An advanced hotel management solution will integrate your hotel operations, people, and processes to ensure you are consistently meeting and exceeding expectations.
To overcome hotel staffing challenges, hotels that digitally upgrade as many of their processes as possible—and integrate them effectively—find this streamlines operations, requires fewer apps, and creates better workflows. Such a system is easier for managers to oversee and allows you to consistently leverage data collected in real-time. A robust hotel management solution enables your team to manage changing conditions effectively with greater confidence.
Manage Hotels Better with WrkSpot
WrkSpot delivers the real-time visibility your hotel needs to overcome staffing challenges but it goes much deeper than that. Using a single software environment, accessible from a stable and secure mobile SaaS application, your teams can better manage the direct relationship between the costs associated with human capital relative to the actual work being completed.
Finally, for the first time it is possible to manage every aspect of your hotel’s operations from a single dashboard that provides the visibility not only to drive more efficient and profitable operations but also to drive accountability and ensure that health, safety, worker, PCI compliance and legal issues are all managed effectively as well. WrkSpot houses your entire hotel management software stack within a single platform, enabling the insights and intelligence you need to respond to challenges as they emerge, and allowing you to make adjustments directly from within an intuitive mobile app.
Minimize Risk with Better Compliance
Upgrade to an incredibly advanced hotel management solution and vastly reduce your organization’s exposure to risk. WrkSpot collects all the relevant compliance data and makes it available should your organization experience insurance claims or complaints requiring access to documentation.
As of 2020, the minimum fine per individual for paperwork or technical I-9 violations was anywhere from $235 to $2,332. Penalties for knowingly hiring or continuing to employ unauthorized persons range between $583-$4,667.
Payment Card Industry Data Security Standard (PCI DSS) compliance has become a very important consideration for hotels. Some hotels are not in compliance and don’t even know it. There are significant penalties associated with non-compliance including lawsuits, audits, fines and even losing the ability to process credit card payments. Your organization should never be unnecessarily exposed to compliance risk and WrkSpot ensures that it isn’t.
Keep Hotel Staff Safer
Wrkspot was also designed to ensure the safety of your staff. Ensure guest and staff safety with a smart system complete with AI to show where people are in your building at any time, matched with an industry-leading panic button solution. When a teammate triggers a panic button, your entire organization will have visibility and be able to respond directly to their location displayed in real-time. This assurance goes a long way to protecting both your guests and staff during times of vulnerability.
It’s becoming harder and more expensive for hotels to secure and retain high-quality staff. This makes it much more challenging to deliver positive guest experiences. Time-intensive manual processes and outdated software solutions do not deliver what you need for success in today’s hectic hotel landscape. The key to resolving staff challenges is to implement a data-driven, AI-powered solution like WrkSpot.