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Labor Crunch is Top of Mind

Created with sponsor support from Hotel Effectiveness, the recent Hotel Business Hot Topics Session, "Looking Forward: Focusing on the Future of Labor," explored how the industry is dealing with the pandemic-induced labor crunch.

HOTEL BUSINESS – (August 23, 2021) - Before the pandemic even began, hotels across the country were having major issues finding labor to fill positions. Then the pandemic hit, and the industry had to lay off or furlough half of its employees. With travel coming back, finding people to fill positions has become a problem.

The recent Hotel Business Hot Topics session, “Looking forward: Focusing on the Future of Labor,” with sponsor support from Hotel Effectiveness, explored how the industry is dealing with this problem.

Moderated by Chip Rogers, president/CEO, American Hotel & Lodging Association (AHLA), the group of industry panelists included Michael George, CEO, Crescent Hotel & Resorts; Del Ross, chief revenue officer, Hotel Effectiveness; Rob Dann, COO, Highgate Select; and David Martin, COO, Vision Hospitality Group.

“Six months ago, we’re all sitting around wondering, ‘When are we going to get back all the customers?’” said Rogers. “Now they’re all wanting to come back and stay in all of your outstanding hotels, and we’re sitting around saying, ‘Where are all the employees?’ This has been a really weird recovery. It has been regionalized, it started a lot earlier in some places like Florida and Texas, and Arizona, but it is full force across the country right now in just about everywhere except for a few select urban city centers. And now we’re faced with this problem.”

Ross reported that at the time of the panel in mid-July, the industry had added nearly 1.5 million jobs since the beginning of the year. “That is pretty awesome” he said. “…And in just in the last 30 days, we’ve actually added about 300,000-plus jobs, which is great, but we still have over 2.4 million jobs left unfilled.”

He wasn’t confident that those jobs will be filled in the rest of the year. “At this point, we don’t think we’re going to see a whole lot more gain in the job count,” Ross said. “After August, at best, it may stabilize, which is what it did last year. It all depends on whether corporate comes back. If it comes back in full, we’re probably going to see continued growth towards employment recovery. If it comes back at a flat level or a slight decline, we’re still going to need a lot of labor because corporate travelers tend to travel in different patterns than leisure travelers, but it won’t continue this upward trend in employment that we’ve seen.”

The industry may not reach the same level of staffing because the pandemic has changed how operators operate. “For us operators, we’ll be able to fully staff our hotels but we’re not going to staff them the way we did pre-COVID,” said George. “So, if you compare us to pre-COVID…we’ll never get there—intentionally.”

If there is a silver lining in the pandemic—and the difficulty in finding labor—it is that it forced changes in the operating model. “There was waste in the model,” said Ross. “…Going back to old-school static methods of planning and managing your staff, and looking at the same ways of working, is a terrible idea… There’s lots of room for improvement and that will yield good changes.”

Ross said that prior to the pandemic, the labor hours per occupied room was 2.1, and that dropped during COVID to 1.4. “The savings during COVID came from two things: the elimination of stay over clean, which is 10 minutes per occupied room and elimination of almost all food and beverage, which is 20 minutes per occupied room,” he said. “Food and beverage jobs will come back, but will they come back to 20 minutes? Maybe not. And if we do our jobs well then perhaps they come back to 10 or 15. Stay-over cleans are not going to come back to where they were—85% of transient stays and 65% of extended stays. That’s not going to come back, but it’ll come back somewhat, so we’re not going to see this 1.4 hours sustained: it’s not possible, it is unlikely to go back to 2.1.”

In the area of daily housekeeping, which was reduced at the beginning of the pandemic, George said that depending on the chain scale, changes can be made, including having guests opt in to having their rooms cleaned. “We’re already bringing it back to daily cleaning with luxury,” he said. “Upper-upscale, we’re doing what we call a ‘tidy up’ now. Opt-in is probably here to stay, but cleaning, especially in upper-upscale and luxury, is an important part of the stay.”

He reported that in the 30 days prior to the session, only 34% of guests have opted into full housekeeping at Crescent properties. Both Dann and Martin said that opt-in rates at their properties are similar.

Dann said that in terms of F&B, grab-and-go may be the way to go from now on because of their reduced need for labor. “These little markets within these big full-service hotels are where people gravitate towards, and the margins on them are great,” he said. “So as operators and owners, we’re pushing more towards that.”

He also pointed to Ian Schrager’s knock-and-drop room-service concept as a way to cut labor. “If you stay in the Public Hotel and you order room service, it’s on a shelf downstairs,” he said. “You get the room service, you go down and you pick up a bag and you go back to your room. You’ve eliminated labor, which is the biggest cost of the whole thing. It’s a much more efficient system. Those are the kinds of things that are going to be happening, but it will never get back to where we were before. I think it’ll be driven by consumer behavior…and that’s where the consumer behavior seems to be.”

While there has been a move away from guest-staff interactions because of COVID, Martin said that this should not be the norm going forward. “Hospitality will never die,” he said. “The passion for the industry, the passion of the server is going to remain strong, from my perspective. The people that we have, they’re working really hard, but they’re really passionate about serving the needs of others. I think we’re going to continue that as an industry…What we’re offering has got to still be that emotional connection with the people. We can’t lose out as an industry, and I don’t think we will. It’s inbred in those that choose the industry.”

Martin did say that his company is seeing applicants who want to work at its properties. One problem is allocating time for the hiring process because it is short-staffed. “Where we have struggled is having the time on the property level for the recruitment and the onboarding because of the multitasking that every one of our managers are doing,” he said. “I’ll look at Indeed and I’ll see 30 applicants need to be responded to that want to work for us at a particular location, and it’s really carving out the time.”

He said that his company has worked to solve that problem, including bringing back its corporate recruiter and reallocating hours to dedicate to recruitment follow-up and onboarding, allocating additional labor to those functions. “People want to work for us, but it’s just difficult for the property because the GM is closing, doing the night audit, doing the schedule and getting the financials out on time, and everything in between.”