Hotel Effectiveness Blog

The Three Keys to Lower Labor Costs

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wage rates

Hotel labor costs are rising quickly.  In the USA, a shrinking, competitive labor pool is driving wage rates, overtime and contractor usage to unprecedented heights, and the increases are projected to continue for the next 2-3 years.  Fortunately, most hotels can offset these factors and actually reduce labor costs by implementing three basic components of labor management.

The Blackstone Group conducted a research study to assess the potential for savings based on robust labor management practices.  The study, which included hundreds of limited and full-service hotels in the USA and Canada, found that every hotel can reduce labor costs.  A well-run select service hotel can save 4-6% of total labor costs annually, and savings for a full-service property can be 6-12% or more.  

The three components of a winning labor management process are:

  • Labor Standards - defining the relationship between your business drivers and staffing needs
  • Dynamic labor plans - connecting your driver forecasts and your Labor Standards to produce detailed labor plans and schedules for every position in your hotels
  • Accountability and oversight - creating tools and processes to monitor compliance with your labor plans and empower managers to address threats and opportunities immediately and communicate any changes or adjustments to leadership.

In partnership with AAHOA, Hotel Effectiveness created a free webinar to describe these three steps in more detail.  Contact us and we will provide you with a link to the webinar which you can watch at your own convenience.

Please complete the form below and a member of our team will contact you to schedule a demo!

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