Industry Update
Opinion Article19 August 2021

The Hospitality Employee Conundrum and How to Adapt

By Derrick Yee, Principal of Kahana Capital Partners, LLC and consultant of Cayuga Hospitality Consultants

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As we come out of the pandemic, the conundrum of finding and retaining hotel employees has reached new levels. Prior to the pandemic, this challenge was primarily experienced in extremely low unemployment markets (like Austin and San Francisco) as well as highly seasonal markets that had to flex labor to match changes in demand.

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Our recovery depends on being able to deliver great guest experiences, but we cannot do that without great employees. With travel demand returning faster than previously anticipated, addressing the problem will be critical to being profitable in the next cycle and will require all of the industry’s stakeholders to get involved.

Changing Talent in Hospitality

Hotels and hospitality provide one of the most dynamic work environments around. The opportunity for upward mobility is perhaps amongst the best of any industry. Collectively, we fail to tell this story and keep it a priority through each business cycle.

During the pandemic, with forced hotel closures, it understandably resulted in substantial furloughs and layoffs. However, the way the separations were handled across the industry left many workers with a sour taste for both their former employer and the industry.

As a result, much of the talent that represented our former colleagues, have transitioned out to other opportunities. In the most recent Q2 2021 survey of 13,000 workers by Joblist, one third of all former hospitality workers responded that they would not be considering returning to the industry in any capacity.

How do we do better this next round? How do we grow the workforce needed to thrive or adjust to doing more with fewer employees? The following thoughts are intended to provide some ideas as well as initiate additional discussion and collaboration on addressing this pressing issue.

1 – Improving the Employment Fundamentals, Adapting for the Future

In the same Joblist survey, 45% of the respondents cited wanting higher pay and 29% expressing a desire for better benefits. As competition for employees tightens in major markets, hotels can no longer think of pay simply against other hotel employers. Manager and owners must consider competitive industries also looking to fill comparable positions, including those in tech, logistics and retail.

An Example: Front Desk Staff

One role that is representative of this struggle, is front desk staff. Hotels need front desk employees that are personable, trustworthy, intelligent and quick to respond to dynamic environments. These are all skills/traits that are also highly desirable for comparable jobs in other industries, many of which have significantly higher starting wages.

For these roles, wages must increase to reflect the increased professionalism desired in these roles. Without addressing this fundamental point, hospitality will fail to secure quality employees.

How to Pay for Wage Increases

How do we afford those increases?

To mitigate the increases in human capital, automation and innovation are required to reengineer existing operating models. Streamlining/automating more menial tasks will free up human capital to be focused on more complicated and value-add parts of the operation.

From back of house to front of house, we need to examine how we can leverage technology and new systems to minimize the time spent on activities that do not need a human touch. We can then rework job descriptions and roles to make them broader, more engaging and better aligned for future career growth.

2 – A New Recruitment Message

As we go out to recruit a new generation of talent, all parties must do a better job structuring and narrating job growth opportunities.

While fundamentals cannot be ignored (competitive wage, competitive benefits, not just against other hotel employers, but competitive employers in tech, logistics, and retail), the industry must communicate the key differentiator – jobs in the hospitality industry are really career paths.

The American Hotel & Lodging Association (AHLA) has issued several good articles regarding this aspect of the industry, but all parties must do their part to magnify the message and reinforce this opportunity to those entering the industry. This AHLA message communicates their mission to attract, retain, and educate top talent.

Only be reflecting the dynamism and entrepreneurial spirit of the industry can we hope to pull in talent that would otherwise be pulled to jobs that maybe seen as easier or more financially lucrative in the short term.

3 – Priority on Retention

Once recruited, more must be done to improve retention and create coherent paths for career growth. Organizations need to place a priority on developing succession plans for key positions to prevent vacancies. If the industry continues a pattern of focusing only on the immediate employment needs and chronic understaffing, a tremendous amount of resources will continue to be wasted on repeated training and onboarding. Additionally, asset performance is set back each time leadership roles go unfilled.

Retention should be a critical issue that owners and managers should collaborate, including re-evaluating current salary, incentive and benefit structures. Our leaders run multi-million dollar businesses. Securing and preserving the best talent to oversee these enterprises will only maximize financial results for all parties involved.

How can retention be improved? While there is no single silver bullet, here are some suggestions to create an action plan.

Communication and Goal Alignment

Aligning goals and establishing clear communication of those goals is critical to actively engaging team members and partners. Research on employee retention consistently finds that understanding one’s role and impact in the organization is critical to engagement and satisfaction. Ensuring that team members understand the goals and communicating progress is critical to making team members feel integral to the organization, increasing loyalty.

Creating Career Development and Career Advancement Opportunities

The industry has to emphasize that jobs in the hospitality industry can readily become life-long careers. While that message may get new employees in the door, creating concrete career development and advancement opportunities is the only way to keep those employees.

Understanding Critical Employee Touchpoints to Create Differentiated and Targeted Incentives

When there is equitable pay and benefits, employee retention is enhanced by understanding critical employee touchpoints and needs. Creating additional incentives and benefits can differentiate our employee’s experience and desire to remain. For some it may be PTO, work flexibility or opportunities to cross-share experiences between departments or other properties.

Hospitality inherently has some unique benefits that other industries cannot match, including travel discounts and great partnership opportunities. Leveraging these differentiators can be critical to standing out against other competitive employers in other industries.

4 – Dedication to Innovation

Beyond the benefits of mitigating increased labor costs, a focused effort on continual innovation is another way to attract and retain employees. The pandemic did increase customer adoption of several key technologies, including digital check in and keyless entry. Both technologies can streamline demand on front office staff, enabling that staff to focus on other value add and rewarding activities. New innovations may create new, attractive job roles.

A prime example is social/digital marketing. A decade ago, specialists in those fields were unheard of. Today, many resorts have dedicated resources to create and manage content, which drives leisure demand.

Integration of new technology can reduce our need for labor to complete unsophisticated tasks and create new career opportunities that incorporate new skills and activities.

5 – Employees as Customers

We must win our employees like we win our customers.
As hotel asset managers, focusing on this area of value creation is just as important as capex planning, sales and marketing and revenue management. The competition for these employees begins with the first recruitment message and continues throughout their career.

The ideas outlined above are just some of the ways we can improve the appeal of the hospitality industry so that we continue to attract top talent. The employment challenge in our industry is great, but it can be won. Securing and nurturing great employees will create a competitive advantage that will have direct benefits to our customers and bottom line.

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