232 | Wage Pressures: How to plug cost leaks in your hotel’s labor pool (Labor and Hiring Part 2)

10/02/19 • 32 min

At the peak of a great upward climb from the Great Recession, the U.S. lodging industry is seeing a leveling off in business performance.

During the 25th annual Lodging Conference in Phoenix last week, many industry experts talked about a new normal of muted revenue gains and thinner profit margins as expenses continue to grow.

The biggest and fastest-growing operating expense in the hotel industry today is labor.

STR reports U.S. hotels saw labor costs grow an average 3.7 percent from 2016 through 2018. Those three years are the only period in the past 20 years in which labor costs exceeded revenue growth.

Although industry analysts cite much-talked-about causes of increased labor costs such as minimum wage laws and a tight employment market, some of the reasons your hotel is wrestling with the expense are not so obvious.

In this episode of Lodging Leaders – the second in a two-part series about hiring and labor – we explore how you can get a grip on labor costs, become more efficient in scheduling employee hours, and manage employees’ work expectations.

We hear from Del Ross, chief revenue officer at Hotel Effectiveness; Bryan DeCort, executive vice president at Hotel Equities; and Bruce Barishman, vice president of operational excellence at Interstate Hotels & Resorts. We also include excerpts from a presentation by economist Bernard Baumohl at The Lodging Conference.

At the peak of a great upward climb from the Great Recession, the U.S. lodging industry is seeing a leveling off in business performance.

During the 25th annual Lodging Conference in Phoenix last week, many industry experts talked about a new normal of muted revenue gains and thinner profit margins as expenses continue to grow.

The biggest and fastest-growing operating expense in the hotel industry today is labor.

STR reports U.S. hotels saw labor costs grow an average 3.7 percent from 2016 through 2018. Those three years are the only period in the past 20 years in which labor costs exceeded revenue growth.

Previous Episode

231 | Culture Club: Your hotel’s work environment may be bad for business (Labor and Hiring Part 1)

Is your hotel a fun place to work? Do your employees look forward to spending their day at your hotel?

If the answers are no, then your business is in trouble.

Do you have difficulty keeping good employees? Do you see staff members whispering in huddled groups? Do you or your supervisors work behind closed doors?

If the answers are yes, then your business is in trouble.

Many hotel managers know how to build a culture of service to attract guests. At the same time, they may overlook the needs and expectations of the other people in the building.

Successful leaders not only focus on creating positive experiences that acquire guests and build customer loyalty, they expand those strategies to the hotel’s workforce to attract and keep good employees.

This episode of Lodging Leaders explores the concept of workplace culture, and why it matters, especially in today’s tight labor market.

We talk about how a positive work environment can make your hotel business, and how a toxic atmosphere can break it.

We interview Del Ross, chief revenue officer at Hotel Effectiveness; Carrie David, chief human resources officer at Interstate Hotels & Resorts; Chris Bennis, a recruiter with Snelling Hospitality; Bryan DeCort, executive vice president at Hotel Equities; and Nancy Curtin Morris, vice president of learning and people development at Hotel Equities.

Next Episode

233 | How Does Your Hotel Rate? Smart pricing strategies key to winning in a downturn

It’s often said the U.S. hotel industry is a street-corner business. With that point of view, it may not take much for a hotel operator to panic and set off a price war on your block.

The industry fell victim to mindless discounting in the days immediately after 9/11 and during the depth of the Great Recession.

Today’s hotel owners and operators like to think they’re smarter than that.

Over the past decade, revenue management – the science of smart pricing – has become a standard practice.

At the same time, technology providers have created automated programs that help properties determine the right price for the right guest at the right time. And hotels have a long list of online channels where they can advertise rate and convert browsers to bookers.

As the industry begins to see a slowdown in business performance, Lodging Leaders explores how hoteliers should be pricing now and in the near future.

We interview several specialists and technology innovators who focus on nothing but revenue management for hotels.

They share what to do if a hotel in your market starts to discounts rates; how to use online booking channels to generate more business; how far out to plan your revenue strategy; and what tactics to deploy to optimize profit.