In an industry first, hotel asset management specialist TFG Asset Management has revealed the financial impact of high staff turnover on Dubai's booming hotel industry.
Dubai's hotel room supply grew five percent in 2016 to surpass the milestone of 100,000 rooms for the first time. The emirate currently has more than 20,000 rooms under construction in 69 properties, according to the latest data from industry analyst STR.
With the influx of new supply and increased competition for experienced staff, the issue of high staff turnover has become an increasing concern for Dubai's hoteliers.
In its new industry white paper, The Impact of Staff Turnover on a Hotel's Income Statement, which was produced in conjunction with Jumeirah Group venture, Emirates Academy of Hospitality Management, the firm reveals that hotel staff turnover in Dubai currently averages 25-30 percent per annum.
The research, which surveyed industry stakeholders including global hotel management firms with a significant presence in Dubai, revealed that a 30 percent turnover rate could potentially reduce a hotel operator's gross operating profit (GOP) by AED6 million ($1.63 million) per annum.
Commenting on the findings, Mariano Faz, head of TFG Asset Management, described this turnover rate as a "significant figure that can be mainly attributed to deteriorating staff loyalty".
"The challenge facing Dubai-based hoteliers to retain their best staff can be immense in the face of increasing competition from new operators entering the market and the expansion plans of existing rivals," he said.
"In a market with such vast opportunities, job seekers have considerable options, making it challenging for hoteliers to attract and retain the best talent."
Interestingly, financial incentives are not always the primary motivator for hotel staff seeking alternative employment opportunities.
According to the research, likely factors can range from a lack of faith in management, poor relationships with colleagues, and a lack of career development opportunities.
Entry-level staff were also more likely to switch jobs more regularly than middle- and senior-management employees.
Importantly, the white paper presents a range of strategies designed to help hoteliers mitigate these challenges.
Faz believes encouraging staff loyalty should begin at the interview phase.
"Given the fierce competition for staff, hoteliers will often rush an appointment without considering that person's real-world qualifications for the role," he said. "A better approach is to consider a potential candidate based not only on their experience, but their attitude and willingness to embrace the corporate culture and their perceived long-term ambition to develop their career with the operator."
The Impact of Staff Turnover on a Hotel's Income Statement is available to qualified industry professionals via download here: http://www.tfgassetmanagement.com/news/tfg-asset-management-library/the-impact-of-staff-turnover-on-a-hotel%E2%80%99s-income-statement.aspx