advantage of price-insensitive guests , operators are beginning to raise the price of upgraded rooms at the time of purchase or upsell at the time of checkin . As a result , many hotels , especially those in resort destinations , are experiencing meaningful ADR growth , with revenues far exceeding 2019 levels .
INCREASING OPERATIONAL EFFICIENCY COVID-19 has changed almost every aspect of the hospitality industry and encouraged owners and operators to quickly change their operational strategies . With the introduction of mobile check-in , optional daily housekeeping , and selective food and beverage options , labor cost savings have been realized not only in hourly positions but also midlevel management .
During the onset of the pandemic , owners and brands came together to make significant efforts to change brand operating standards to help offset increasing labor costs while continuing to meet customer expectations . While some operational changes may return to their pre-pandemic state , some changes will be permanent . According to Truist Securities Research and HotStats , while front office per occupied room ( POR ) costs are somewhat fixed , housekeeping POR costs are growing more in line with occupancy , indicating clear operating efficiencies . The strategic move to optional daily housekeeping services by many hotel brands and independent hotels portends signs of sustainable cost savings , though opposition to such changes by labor unions remains a challenge . For urban corporate hotels still facing uncertain profitability , a change in housekeeping services by brand standards could help the property ’ s bottom line experience sustainable improvement .
Not only have there been operational efficiencies at property levels , but several third-party hotel management companies have also merged in recent years . These mergers will create greater economies of scale , which may also lead to higher gross profits over the long term .
LABOR COST INCREASES , SKILLED LABOR SHORTAGES In urban markets with heavily unionized employees , wage increases have been in the mid-single-digits , but in markets that experienced significant in-migration from urban locations during the pandemic , wages have grown upwards of 20 %. To attract and retain workers , operators are offering signing , retention , and referral bonuses .
However , even with the increased wages , employees are leaving the hospitality industry for other sectors for reasons beyond pay and company culture . Given the atypical working hours for hotel positions relative to most non-service jobs , which offer traditional Monday – Friday daytime schedules , and inconsistent hours due to uncertain hotel demand , talented employees are leaving for more consistent and predictable schedules . The potentially hostile work environment , with some customers becoming angry and aggressive over mask mandates and reduced staffing levels , is another reason for on-property hotel employees to leave their jobs .
EMPLOYEE RETENTION FACTORS So , what are hoteliers doing to mitigate labor shortages across the industry ?
According to BigHospitality , salary is the most important factor for retaining the best workers in the hospitality industry . However , factors including career progression and employee training programs , such as hospitality industry certifications and online courses , can help enhance employee retention .
With the increase of work-from-home culture brought on by the pandemic and the desire for jobs that offer such flexibility , it may be necessary for management to provide onsite childcare services to retain workers . Furthermore , a compassionate management team that understands employees ’ frustrations and needs would also go long way toward improving retention rates .
Lastly , more flexible U . S . government immigration policies would help reduce the labor shortage and wage growth issues somewhat . While issuing more H-2B visas would not completely solve the labor shortage , it would benefit the industry in the short term .
CONCLUSION The last two years have been a time of flux for the hospitality industry , but with a high percentage of the U . S . population vaccinated and consumer confidence returning , the industry is now showing obvious signs of recovering profitability . Even with rate increases due to inflationary growth , the pent-up demand for travel is resulting in strong reservations for the summer months . As hoteliers continue to offset the growth of expenses with higher prices , operating efficiencies , and employee retention , profitability will grow measurably in the near future .
May 2022 hotelsmag . com 31