With travel demand accelerating rapidly, the hospitality industry is experiencing a new major challenge: labor shortages resulting in sharply rising labor cost in the U.S., which consumed as much as 87% of RevPAR (CBRE) in Q1, 2021. Total labor costs in the U.S, as percentage of total hotel revenue, jumped from 37.4% for the period April 2019 - March 2020 to 60.5% between April 2020 and March 2021 (HotStats).
In the U.S. alone, hotels need to hire 600,000 more employees by summer to be able to meet demand (BIS.gov). As of mid-May, there are 171,800 open positions on LinkedIn for hospitality jobs in the U.S.
Hotel Effectiveness reported that wages in hospitality operations - frontline position such as housekeeping, front desk, wait staff, line cooks, etc. - are up more than 20% since April 2020. Hotels and restaurants alike are offering sign-up bonuses (Marriott is offering $1,000!), higher wages way above $15/hour, and even cash payments to candidates just to come for an interview. At the same time productivity is down due to influx of inexperienced staff, since many of the experienced hospitality professionals left the industry for greener pastures due to furloughs and layoffs during the pandemic.
In my view there are two ways for dealing with the acute labor shortages and unsustainable labor cost:
- Pay up: Continue to offer sign-up bonuses, higher wages and interview cash payments, making profitability even more elusive, or
- Invest in technology to solve the current labor shortages through technology innovations, automation, mobility, robotization and next gen technology applications. The goal here is to do more with fewer employees by using technology and reduce your staffing needs by a significant percentage compared to 2019 levels.
Accelerated Investments in technology are also necessitated by the exceedingly tech-savvy guests and their exceedingly high technology expectations. Gone are the days when hotels offered “a home away from home” with comparable technology amenities. Unfortunately, many hotels nowadays offer “a subpar home away from home” experience as far as technology is concerned.
So how can you reduce your staffing needs through technology? Here are just a few suggestions that are geared toward independent hotels, small and midsize hotel brands, though most are equally valid for major hotel chains - the opportunities are endless!
You start your staff reduction long before your guests arrive at the property. The goal here is to try answering in advance all possible questions potential guests might have about the property and its surroundings, position your hotel as the best choice in the destination and steer travel consumers toward making the booking.
Website and Booking Engine:
Review or hire an outside consultancy to audit your property website and booking engine. Why does the quality of the website and booking engine matter? If we put aside the value of much-needed direct bookings, having a good website and booking engine significantly reduces phone calls or email requests to the property.
The issue with calls or emails is that when people call or email, someone at the property has to pick up the phone or manually reply to the email. Analyze why people are calling the property. Is it to make reservations? If yes, then perhaps your property’s website and booking engine are not doing an adequate job. If it’s for information about your property’s location, services and amenities, perhaps your website technology and content need a serious overhaul.
Here are some features you should be on the lookout for:
- Website: Does your property have a mobile-first website? If you don’t, with 70% of today’s travelers visiting hotel websites via mobile devices, some will call or email your property to get information and book, most will choose an OTA or a competitor.
- Is your website powered by best-of-breed Content Management System (CMS) technology, allowing you to update the visual, textual and promotional content 24/7 and create unlimited content pages and sections calendar of events, promotions and landing pages?
- Do you have a personalization engine on the site to provide customized content and custom-tailored offers based on the user demographics, feeder market origin, browsing behavior, membership status?
- A virtual concierge on the site like Alice App or Alliants to answer questions about the destination, the property amenities, events and happenings?
- How about a user-friendly, state-of-the-art website booking engine like SHR’s Windsurfer or Avvio’ Allora to guide the user through a frictionless booking process that results in significantly increased sales of rooms, packages, promotions without human assistance?
An AI-powered chatbot on the property website like Asksuite or Umni.bg engages users, answers all of their questions and steer them toward making a booking. Chatbots provide users with information through text, images, video, audio, etc. and serve as your property’s 24/7 virtual customer service department. Edward, the chatbot of Edwardian hotels in London responds in real-time and round-the-clock to inform on hotel services and amenities, make recommendations, handle customer complaints, etc., thus relieving the workload of the front desk.
After the booking is made, your efforts do not stop there. Using CRM technology like Cendyn CRM Suite or Revinate you continue the “automated conversation” with your booked guests: from reservation confirmations, pre-arrival messaging with useful information like weather during the stay, events and happenings at the property and in the destination, customized upsells and upgrades based on the RFM Value or membership status of the guest, etc. The CRM technology automates the pre-arrival conversations with the guest, provides information and answers to important questions arriving guests might have and relieves staff from having to answer phone calls and emails.
Mobile check-in achieves four objectives:
- Provides contactless experience preferred by the majority of today’s customers
- Reduces significantly the number of front desk personnel needed to check-in guests
- Optimizes the utilization of housekeeping staff
- Allows you to generate, in an automated fashion, additional revenues via upsells, upgrades and cross-sells.
All major cloud PMS platforms like Opera Cloud, Protel, CloudBeds, Mews, etc. offer mobile check-in applications, as well as third-party vendors like Canary Technologies, StayMyWay, OpenKey, Intelity, Runtriz or hardware vendors like Assa Abloy, Onity, Salto, etc.
Many of the travel consumers’ tech expectations are around self-service, so let’s give the DIY-obsessed consumers what they want! There are several mobile check-in functionalities that can save significant labor costs and generate revenues you should consider:
- Housekeeping: When checking in - whether via mobile app, message or email link, self-service kiosk in the lobby or via the front desk - the arriving guest should be able to choose the type of housekeeping they are comfortable with during their stay: daily, once every 3 days, weekly, etc. or no housekeeping, just leave fresh towels by the door. This allows better planning, scheduling and utilization of your housekeeping staff and in many cases leads to significant reduction in costs.
- Ideally, the mobile check-in application communications should feature AI-powered upsell and upgrade technology like Roomdex or Oracle’s Nor1 to generate much-needed additional revenues.
- Mobile keys: All traditional hotel lock hardware vendors like Assa Abloy, Onity, etc. offer mobile key versions. Vendors like OpenKey, 4Suites and StayMyWay specialize in retrofitting lock hardware with BLE (Bluetooth Low Energy) or barcode technology. For example, OpenKey converts 35 popular hotel locks into keyless locks. All of these vendors are capable of sending mobile keys in advance as part of the mobile check-in process.
- Room selection: Look for PMS or third-party applications that allow your guests to select an available room from a digital floor plan of your property. The new Oracle Hospitality Integration Hub already offers a similar partner application. Travel consumers are already accustomed to choosing online airline seats, movie theater seats, opera seats, etc., why not hotel rooms? This can be a great way to generate additional revenue: You want a room away from the elevator? It’s $10 more. A room on a higher floor? $20 more. Upgrade to a suite for $50? I am convinced room selection will become the norm within the next few years. Enabling advance room selection and mobile keys is a great way for reducing the need for front desk clerks.
Case Study: Hilton’s New Room Selection Capability
Offered exclusively to the Hilton Honors program, members can check-in the day before arrival and select their rooms from a digital floor plan or list directly from their mobile device, tablet or computer at all U.S. properties across Hilton’s 11 brands. This service is expected to become available at all Hilton properties worldwide by end of year. Members can customize your stay by purchasing a room upgrade (if available) and requesting specific amenities to be delivered to their room before arrival.
2. At the Property
Smart technology investments in operations and customer service can significantly reduce your property’s staffing needs. Here are some examples:
Self Check-In Kiosks:
Upon arrival at the property, those guests that haven’t checked in advance can do so via the Self Check-in kiosks in the lobby, offered by a number of PMS (StaynTouch, Agilysys, etc.) and other vendors. Recently Marriott announced that it is testing automated kiosks equipped with self-cleaning touch screens that can check in guests and hand out room keys. With mobile and self check-in, you can handle most of your guests and reduce your front desk staff to a “skeleton crew” level, sufficient to handle complex customer service issues.
Large hotels with conference facilities, resorts with large pool areas and casinos can benefit greatly from security robots, diligently working 24/7. Fully autonomous security robots by Knightscope are already being used as security guards at resorts, large hotels and casinos, airports, theme parks and outdoors perimeters. The rental of a security robot goes for $7-$10 per hour vs $25-$30/hour for a human guard.
Cleanliness and Disinfection:
The LightStrike UV-C light Germ-Zapping Robot by Xenex Disinfection Services and the Germinator Robots by Germbusters use xenon ultraviolet light pulses to kill viruses, bacteria and fungi and are already deployed at hundreds of hotels in the U.S.
Robots like Rosie by Maidbot, 2,000 of which have already been deployed at various hotels, clean guest rooms 20 percent faster and public areas up to 80 percent faster than human housekeepers. Robot-housekeepers mean 24/7 cleanliness programs, no health risks when handling toxic disinfectants, electrostatic sprayers, UV-C light devices, and all of this at 6 times lower cost per hour.
Porter and delivery robots have been in use at hotels ever since the Aloft Cupertino debuted a Relay delivery robot by Savioke back in 2014. Relay robots and Tug robots by Aethon are increasingly used at hotels to deliver in-room items to guests, like their luggage, room service meals and fresh linens.
Already used by thousands of hotels, Internet of Things (IoT) devices sense when the guest is or isn’t in the room and automatically adjust lighting and temperature thus saving utility costs; alert housekeeping when room is empty or vacated, signal engineering when something needs fixing, etc. This automation saves serous labor costs from reduced maintenance, housekeeping, human monitoring, etc.
The future definitely belongs to the fully-automated “Smart Room”, similar to the ones being developed by Marriott (IoT Guestroom Lab), Hilton (The Connected Room) and other major brands: a hotel room that knows your preferences and automatically adapts to your likes via IoT, mobility and automation from lighting to room temperature, syncing the smart TV with your Netflix, Prime or Hulu streaming accounts, automatically ordering from housekeeping extra pillows or blankets or your brand of single malt whisky from room service, if this is what you like. Hilton CEO Christopher Nassetta describes the “Connected Room” concept: “Imagine a world where the room knows you, and you know your room.”
Guests want to communicate with hotel staff on devices and platforms of their choice. Adopting guest messaging and issue resolution applications like Runtriz, Zingle, Guestware, Beekeeper, etc. via guests’ own smartphones or voice assistants in the room like Volara and Intelity not only improve customer satisfaction and staff efficiency, but reduce the need for human customer service.
Robots like Hilton’s concierge robot Connie, developed in collaboration with IBM, and in-room concierge via voice assistants like Volara and virtual concierges like Alice App, Alliants and Flexkeeping provide guests with information about nearby attractions, places to eat, and hotel information a d make human concierges obsolete.
Staff Collaboration Tools:
Staff collaboration tools like Beekeeper, Quore, Zingle, Alice, HelloShift, etc. keep staff members and teams connected at all times and in real time, which vastly increases the flow of information, job performance, issue resolution and staff efficiencies.
3. Food & Beverage (F&B)
F&B tends to be the most labor-intensive segment of hospitality. One thing is for sure in the post-COVID era: restaurant menus will be greatly simplified and room service will mostly disappear, replaced in many instances by food delivery services like GrubHub, DoorDash, etc..
Unless your property has high-end F&B or a Michelin star-rated restaurant, you can achieve significant cost savings via technology innovations, and here are just some of these:
Waiting for a waiter to come and take your order is so…pre-pandemic! Self-ordering kiosks like Olea and Kiosk, table ordering screens or menus via QR Codes and ordering via customer’s own smartphone is the way to go after the crisis.
We will be witnessing a real resurrection of the vending machine serving breakfast, snacks, hot and cold drinks, naturally in a much more sophisticated interpretation. Marriott is already testing giant vending machines it calls “grab-and-go marketplaces” that can dispense everything from coffee to breakfast sandwiches and cereal.
Robot waiters by Keenon Robotics are deployed in over 5,000 restaurants worldwide and replace 100% of the waitstaff.
Robot-bartenders like Tipsy Robot by Makr Shakr makes 120 plus drinks per hour, replaces up to 4 human bartenders and saves 25% of the drink waste/spillage. Other bar tending robots like Barsys 2.0 by New York-based startup Barsys, Barney by Baronics and the DrinkBot by Botrista are also being deployed across the nation.
Robots like Flippy by Miso Robotics are flipping burgers at CaliBurger and White Castle Restaurants to the delight of their customers, while the salad-making robot Sally by Chowbotics prepares signature salads at quadruple the human pace.
Self-contained, fully automated restaurants are no longer a thing of science fiction novels.
- Spyce, a robot-powered restaurant in Boston, has successfully pioneered an entire restaurant built around automation.
- Creator, San Francisco’s automated burger restaurant, features a 14-foot burger machine with more than 350 sensors that is capable of making 130 premium quality custom burgers an hour, plus a window for takeout orders.
- Piestro, an innovative robotic pizza shop, can deliver high-quality artisanal pizzas within 3 minutes. Their fully-automated machines are being designed with the aim of allowing for zero contact food preparation, zero food waste, consistent quality, and a much lower cost of operation.
Labor cost savings do not stop after the guests leave the property. Having a meaningful CRM technology application as part of your hotel tech stack provides automated post-stay communications, guest satisfaction surveys, guest retention marketing automation and drip marketing campaigns, guest recognition program management and loyalty marketing. All of these fully automated initiatives save significant labor costs vs having to do this the pre-Covid way.
The recent privacy moves implemented with Apple’s iOS 14 update plus the elimination of the 3rd-party cookies by Google underscores the importance of first-party data, hence the urgent need for any hotel company to have and utilize a Customer Data Platform (CDP). First-party data is the customer data (past customers & guests, website users, opt-in email subscribers, lists of corporate travel managers, meeting planners, wedding and event planners, SMERF group leaders the property has been doing business with or at least in communications with, etc.) that comes from the PMS, CRS, WBE, CRM program, from the property's website, opt-in email sign-ups, even customer lists sitting on laptops of sales and marketing personnel.
Does your property use a Customer Data Platform (CDP) like Starling by Cendyn, containing all of the hotel first-party data that is being cleansed, de-duped, enriched and appended? The CDP provides “a single source of truth” for your guest data and not only creates 360-degree guest profiles, but more importantly augments guest profiles with preferences, social media ambassadorship data, customer engagement data, etc. which allows for highly personalized customer service delivery pre-, during and post-stay, and highly effective one-to-one marketing and guest retention strategies. A CDP can significantly increase customer engagements and boost revenues via look-alike audiences/cohorts marketing while sharply reducing marketing spend, payroll and agency fees.
During a recent investor call Hilton CEO Chris Nassetta summarized nicely the direction the industry is moving toward: “The work we’re doing right now in every one of our brands is about making them higher-margin businesses and creating more labor efficiencies, particularly in the areas of housekeeping, food and beverage, and other areas. When we get out of the crisis, our brands will be higher margin and require less labor than they did pre-Covid.”
Will technology ever replace humans in hospitality? Over time, next gen technology will undoubtedly replace or collaboratively augment all mundane, repetitive and dangerous jobs in hospitality like housekeepers, porters and baggage handlers, concierges, security guards, line cooks, bar tenders, waiters, etc. But technology will not be replacing anytime soon highly qualified hospitality jobs like seasoned and highly skilled hotel managers, revenue managers, digital marketers, IT managers, CRM experts, sales managers, etc.
Using AI, automation, robotization, IoT and other next gen technologies the hotel can still keep a “human facade” but automate all of the back-end operations, enable smart guest communications, and automate and personalize every touch point with the customer. Yes, and add a few humans with a warm smile into the mix.
So how much human labor would a hotel need in the future? Five-ten years from now, hoteliers won’t need half the people they needed in 2019, and the savings from payroll will mean the automation and next gen technology will pay for itself.
*Article originally published in HOTELS Magazine as part of Max Starkov’s Tech Corner column.