Solving Labor Shortage Through Technology

Question

With travel demand accelerating rapidly, the hospitality industry is experiencing a new challenge: labor shortages resulting in sharply rising labor cost, which consumes as much as 60%-80% of RevPAR (CBRE). In the U.S. alone, hotels need to hire 600,000 more employees by summer to be able to meet demand (BIS.gov). Right now there are 171,800 open positions on LinkedIn for hospitality jobs in the U.S.

Wages in hospitality operations - frontline position such as housekeeping, front desk, wait staff, line cooks, etc. - are up more than 20% since April 2020 (Hotel Effectiveness). Hotels and restaurants alike are offering sign-up bonuses, higher wages and even cash payments to candidates just to come for an interview. In the same time productivity is down due to influx of inexperienced staff, since many of the experienced hospitality professionals left the industry due to furloughs and layoffs during the pandemic.

The question is, how can the hospitality industry solve the current labor shortages and unsustainable labor cost through technology innovations, automation, mobility, robotization and next gen technology applications?

Jos Schaap · Answer

I believe there is a 2 part solution here, one that cost money and one that saves money, putting them together will overall increase margin and service effectiveness. The first one is increase wages to make the hotel industry more competitive in the labor market. Obviously that will have a negative effect on the profitability of hotels. To mitigate that hotels should look to automate many of the cumbersome labor tasks, throw out things such as the housekeeping radio and clipboard as well as automate many administrative tasks at the front desk, such as the administrative part of the check in process. Guests really are happy to self check in, and I don't think anybody selects a hotel only for the "Check In Experience". Replace the radio and clipboard with a tablet or let staff use their own device to communicate room tasks etc. Simply things that reduce manual labor. Hotels can then do more with less, and pay the fewer people they need a higher salary. Helping to pay to convert some of the manual processes could for example be a digital upsell or pricing solution, that generates immediate ROI, removes immediately the manual upsell tasks and provides cash to invest in more technology solutions. Investing in tech solutions is also a lot easier today since most offerings have a monthly SaaS lowering the risk and initial investment.

Max Starkov · Answer

Due to the rapid travel rebound, today 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. In 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, orInvest 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 tech expectations. Gone are the days when hotels offered a “home away from home” with comparable technology amenities. Unfortunately, many hotels nowadays offer a “sub-par home away from home” experience as far as technology is concerned. So how can you reduce your staffing needs through technology? Recently I wrote an article on the subject providing concrete and detailed opportunities to lower labor costs in the Pre-, In- and Post-Stay guest engagements, operations and customer service: How Can Hoteliers Solve Labor Shortages Through Technology https://www.hospitalitynet.org/opinion/4104629.html. Using smarts, mobility, AI, automation, robotization, IoT and other tech applications 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.

Mark Fancourt · Answer

When demand for accommodation is greater than supply generally a higher rate is charged for a room. This is sustainable apparently. When the demand for skilled hospitality labour is greater than supply, higher rates of pay to attract talent in a traditionally underpaid industry is unsustainable? I digress. The purpose of technology has always been process optimization. Do more with less. Move at the speed of data. The impetus for the adoption of technology has not changed since pre-pandemic. Perhaps the motivation for adoption has and this is the magic bullet that will see a pendulum shift for the industry..... I tend to take a broader view that a proactive approach to exploiting technology as a practice in business alleviates the challenge of being caught short and needing to scramble. I also take the point of view that it is not as much about the replacement of manpower as it is about enabling your existing workforce to achieve more in their job roles and the operation generally. This translates to an increase in product or service quality. Usually well received by the paying customer. It is an industry imperative as we move forwards that job roles will need to change and underlying business platforms will need to become broader in their functionality to support better job design. Such pressures on industry have been growing for 15 years and are not going away. If anything they are becoming more acute as this example demonstrates. Great technology exists and has existed. Technology need to be managed as an asset of the business to ensure the full advantage is gained for operational and financial performance. In my view this is an aspect of business acumen that is lacking in hospitality.

Michael Heflin · Answer

Hospitality will always be a people business. There is no substitute for a kind “welcome” and an understanding smile. The critical role that technology can, and must play going forward, is the role of enabler. For too long, technology has placed barriers between hosts and their guests, restricting the ability to provide that welcoming embrace. Today technology must enhance the guest/host interaction. But to do this, technology must actively unburden your staff by providing an easy-to-use platform that can streamline operations, facilitate access and communication, and ultimately empower hoteliers to deliver exceptional service to their guests. At base, hotel technology must be easy-to-use and easy-to-train on. It must be flexible and frictionless, and it must be elegant in design. It must be simple to use but unimaginably powerful in its ability to foster service. For a core system like a PMS, hotelier's should prioritize platforms that are guest-centric and staff friendly to streamline operations, increase staff productivity, and enhance the guest's welcome experience. A guest-centric and staff friendly PMS system is equipped with an intuitive interface that is easy to navigate and allows employees to put more focus on serving the guests. Not only does this make it easier to onboard new hires, it also expands a hotels' talent pool, allowing them to focus on candidates who genuinely excel at hospitality, rather than prioritizing those who have experience with a legacy PMS. This is critical in a climate where many experienced hotel professionals have transitioned away from the industry and hoteliers are forced to consider less experienced, but hopefully equally guest-focused, talent. In order to support a lean staff, it's critical to automate as many repetitive administrative functions as possible 一 From bulk check-in, to reporting, to housekeeping management. Automation can streamline a hotel's operations and enable staff to be more productive, but it can also deliver a more personalized guest journey. Take contactless check-in: By providing guests with automated mobile- or kiosk-based self check-in options you can free up staff that would normally be tied down to the front desk. But you also provide guests with a welcome experience that is more convenient and hygienic, and one that gives them the opportunity to enhance their stay with any number of targeted amenity or upgrade offers sent directly to their mobile device. And while mobility can help your staff ditch the walkie-talkies, it also allows them to break free from the front desk to deliver an unburdened and personalized service to your guests anywhere on property.

Michael Vargosko · Answer

I believe we can solve the current labour shortages and rising costs through both the optimisation and adoption of technology in hotels, but this requires a mind shift. We know automation creates efficiencies. But as with the use of any technology, to reap its full benefits you need a solid backbone with the right infrastructure and mindset. Given the current recovery mode of the industry, I believe we should go back to basics. Firstly, optimise the use of the tech that's already in place - work to automate repetitive and often mundane tasks to make operations more effective and efficient, and more importantly make hospitality jobs more attractive. Optimising and automating traditional workflows in departments such as housekeeping and room service will make operations more efficient, while creating opportunities for improved service delivery at the same time. Using AI to help plan schedules for tasks such as cleaning rooms and collecting room service trays creates more efficiencies in operations and reduces room for human error. Secondly, where repetitive tasks are also bespoke we can look at using technologies such as IoT and AI to support operations. Why not use virtual assistants to take on (seasonal) multi-language support or use wearable tech that helps personalise the guest experience. These technologies will not just make operations more efficient and enhance the guest experience, but will also make hotel jobs more interesting, helping us close the talent gap. I see a great future for the use of AI, IoT and biometrics in hospitality to drive innovation in service delivery and enable a more versatile deployment of staff and their skills, making hotel jobs more varied and interesting. To do this, however, we can't be complacent. It's not the tech but the culture that will ultimately drive the results. In other words, we need to get our bus in line with the travellers not the other way around.

Dave Berkus · Answer

Short term or long term? In the short term, raise wages and prices to match. Our industry has shamelessly underpaid its line workers for as long as we can measure, and surely longer. Who wouldn't be willing to pay 10% more for meals and 3% more for rooms to assure continued service and higher quality workers?In the longer term, there are entrepreneurial companies working today on automated responses to mundane tasks such as touchless check-in for hotels and restaurants, automated dishwashing, cleanup and even some food prep areas. For restaurants, table service is due for a complete rethinking now that the tools are available for direct-to-kitchen ordering. That alone would reduce server table roundtrips by half. Not to advocate robotic table delivery, but that too is a possibility that will separate hotels and restaurants by class of service.

Saikrishnan Ranganathan · Answer

Technology innovations have been available since before the pandemic but most hotels were apprehensive about implementing them because they didn't want to replace their people with machines. The pandemic has shown the hospitality industry that technology isn't supposed to replace, but instead, enhance the workforce. Since the pandemic, travellers have changed their requirements to include heightened safety and hygiene measures which include less contact with hotel staff but still expect that personal and bespoke service. With systems like real-time occupancy detection, hotels can make their limited workforce more efficient and productive. For example, with real-time occupancy data, the housekeeping team can prioritise cleaning routes to rooms that are unoccupied first reducing personal contact between hotel staff and guests. With room occupancy trends, hotels can also better schedule their roster to ensure that they're not overworking their associates resulting in a happier workforce. Implementing these kinds of solutions will definitely help hotels improve their productivity and efficiency in the long-term if they choose to invest now as it's the best time to. Low occupancy levels for hotels provide them time to source, execute, implement, and train their staff on the new technologies.

Kathryn Murphy · Answer

I find it impossible to frame a conversation about automation simply around cost savings. Not because automation doesn't lead to greater efficiencies (if done well it undoubtedly does), but because if it's done badly it's a colossal false economy. And unfortunately it's very easy to do badly. If you are relying on a technology to communicate with your guests and staff, you need to be confident that the information it shares is well written, on brand, and crucially, correct. Prices, menus and opening hours change; shops, restaurants, bars and attractions open and close; bus and train routes are reorganised and rescheduled. The information or 'content' that hotels share with guests is constantly in flux, and until someone comes up with a 'content management system for hospitality content management systems', it's stored in multiple silos across multiple systems (such as hotel websites & apps, in-room tablets, chatbots, automated emails & messages, voice assistants, QR codes, etc), all of which have to be individually updated in multiple content management systems each and every time anything changes. The irony is that when it comes to guest facing technologies, the more ways you automate, the more opportunities you give yourself to mess up. Before putting your hotel's reputation in the hands of the robots, you need to be 1000% sure that you have the skills and strategy in place to ensure that the content you share is always relevant and up to date. At the end of the day, a hotel is judged on the service and experience it provides. Exceptional service is exceptional service, whether delivered digitally or in person. However there is no hell fresher than bad service delivered digitally. 'Computer says no' is no way to treat paying guests. I'm hugely excited by the possibilities that automation offers, however it's not as simple as replacing front desk with a chatbot and a few automated emails, or asking your housekeepers to download an app, and watching the savings roll in. To get the most out of technology, you need to completely rethink your guest journey and hotel operations. Focus on ways you can improve your guest experience and make things easier for your staff, and the bottom line will take care of itself.

Stanislav Ivanov · Answer

Labour shortages in the hospitality industries of developed economies are inevitable due to low birth rates, the low salaries and prestige of most entry-level hospitality positions, recent lockdowns and competition for labour from other sectors of the economy. Technology can come to the rescue. Hospitality companies can use technologies such as self-service kiosks, mobile applications, chatbots, robots, etc., to decrease their dependence on human labour. Managers need to evaluate their business processes, assess the labour shortages by process, and focus on automating those activities where staff shortages are most pressing. For example, a self-check-in kiosk at a reception that is available 24/7 would decrease the staffing pressure at the Front Office by transferring some of the tasks from the receptionists to the guests. Although technologies offer solutions, companies should not blindly adopt any fancy technology available on the market – a cost-benefit analysis is a must. It may turn out that the adoption of a new technology solves the labour shortage in some job positions (e.g. waiters, receptionists, cleaners) but creates demand for employees in other job positions (e.g. robot maintenance) that require higher wages. Therefore, it may turn out that the labour shortage has not been solved but transformed from one job position to another. Furthermore, the implementation of new technologies would require the reengineering of business processes within companies. The sheer replacement of a human by a machine would not yield the efficiencies companies aim for – they need to change the processes to reflect the fact that they would be implemented by technology rather than humans (e.g. check-in via a kiosk rather than by a receptionist).

Binu Mathews · Answer

With the prevalence of travel-hungry and tech-savvy millennials combined with the challenges from the pandemic, labour shortages have come to the forefront of concerns for hospitality organisations. However, adopting the right technology solutions can provide effective solutions to labour-related issues. In order to address this issue, there are three focal points for hospitality organisations when adopting technology; 1) Simplified operations through intuitive UX Legacy systems may carry a sense of familiarity. However, these systems require intensive training for those new to the field. Hence, the focus should be on adopting next-gen solutions with simple operations and intuitive UX designs which do not require specialised certifications or intense training. This will allow hotels to bring in employees from other service industries, prioritising customer service as a hiring criterion. This will open up a new channel for acquiring labour while eliminating the high labour cost from trained legacy system operators. Also, focussing on solutions that span across the organisation's operations will allow one employee to manage multiple tasks. For instance, an integrated solution will allow the front desk agent to manage guest requests as well. Solutions like FX, which focus on service effectiveness with guest request-managing features built into the front-office platform, can enable optimum labour efficiency. Research suggests that cross-trained operations can reduce labour need by 15% and reduce hourly costs by more than 9%. Best-of-breed systems, on the other hand, require the staff to learn multiple systems in order to manage additional tasks, making cross-training and multitasking difficult, if not impossible. 2) Self-service tools for guests DIY tools that accommodate B2B2C operations will allow some operations to be carried out by the guests themselves. The best example of this is the airline industry. Self-service technology in airports has paved the way for travellers to carry out almost all the operations, from booking tickets to printing luggage tickets and boarding passes, by themselves. The industry has experienced a significant increase in staff efficiency and a reduction in labour costs through this change. According to a survey by Summit Research Associates, reducing costs (23%) and reducing staff (21%) were the two main reasons driving the adoption of self-service technology. After adoption, Forrester Research vice president Henry Harteveldt says that the cost of $3.02 to check-in a passenger with a service employee, reduced to 14¢ with self-service kiosks. The International Air Transport Association IATA estimates that on average self-service facilities save airlines US$2.50 per check-in, which adds up to US$1 billion in annual industry savings. The hospitality industry can adopt the same process. Guests can be allowed to select their rooms, check-in, order food, request services without the need for extensive interactions with the staff. All-in-one solutions designed to be B2B2C can achieve this. 3) Mobile-first technology Mobile technology enables the staff to carry out functions on the go, reducing unnecessary movement time. For example, it allows group check-ins while the guests are being picked up from the airport freeing the front desk staff. In addition, room service requesting through in-room tabs with mobile notifications for the staff and mobile food ordering systems eliminates the need to run back and forth between stations. In fact, technology can allow the guest to access an interactive menu and order food through their own device by simply scanning a QR code on their table. Research suggests that mobile application integration can save around 7.5 hours per employee, per week. These saved hours will then translate into reduced labour requirements and reduced costs in terms of salaries. The world keeps evolving, with new generations following new trends flowing in constantly. Today, millennials make up more than 50% of your guests, and they represent 35% of the global workforce, with the numbers predicted to rise to 75% in 2025. So, it is time to leverage the hotel operations to accommodate this tech-driven generation effectively. This will only be possible if hospitality leaders are ready for a change. This change will be disrupting, but it will also bring in efficiency and profitability. Technology is ready; is the industry ready?

Marco Correia · Answer

Now that the recovery seems undeniable, the hospitality industry is facing a shortage of labour. The tsunami of furloughs and layoffs that hit the industry during the pandemic peak has caused many skilled hospitality workers found occupation in other sectors that offer more stability, better wages and a better balance between personal and professional life. Hardly those professionals will return to the industry. This is a worldwide phenomenon, and although the premise for this viewpoint is very US-centric, there is undoubtedly a search for technological solutions that can reduce the impact of the labour shortage experienced by the industry. We can classify the nature of these tools into three prominent families. Scheduling and Human Capital Management software – This family of tools aims to optimise the labour resources based on actual demand and accurate forecasts. Its end goal is to transform labour cost from a fixed to a variable cost. We believe that the success of this software family is dependent on the local labour laws. If in the United States these can be very effective tools in markets, such as southern Europe, where legislation is rigid, its effect will be minimal. Robotization – Discussed in a past Hospitality Net's viewpoint, we believe that robots are far from replacing human labour in many of the positions where the labour shortage occurs. The current state of robotics makes the idea of replacing humans with machines nothing more than wishful thinking. Process Automation – This is the area that, in our opinion, brings more possibilities to tackle the current problem. By automating repetitive and mundane tasks while, at the same, transferring to guest some business processes ( e.g self-service check-in) will allow hotels to do more with fewer people. In conclusion, we believe that technology can help optimise labour spending and fight the lack of skills that the industry is experiencing. However, the big challenge of the current scenario doesn't sit in the IT department but at the HR level, where creative ways of regaining the lost talent are urgently needed.

Simone Puorto · Answer

It's no mystery what my feelings are toward technology. I've been a technophile for most of my adult life, and I have a book on post-human hospitality coming out next year. You can go as far as calling me a transhumanist, too. That being said, I am a strong believer in the cooperation between humans and machines, rather than machines replacing humans tout-court, at least in the near future. Of course, even due to COVID, we've witnessed an acceleration in self-service technologies in hotels, such as self-check-in/out apps, keyless technology, check-in/out kiosks, etc. The guest is becoming more and more a "prosumer," terms created by futurist Alvin Toffler that refers to an individual who is both consumer and producer. However, this level of automation is far from being mainstream, and the industry will likely suffer from human labor shortage in the short term. What hotels can do is starting embracing technology that can take care of the "logistic" part of travel and, by doing so, relying less on humans for things such as check-ins, check-outs, invoicing, etc. What we don't know, though, is if guests are ready to be served by machines yet, because all the studies on the topic are highly speculative, and the (very few, to be honest) examples of properties run mainly by machines are not particularly reassuring.

Christine Demen Meier · Answer

Next-gen technologies like AI, robotics, automation, mobility and IoT are removing low-skilled jobs from our industry and will create a raft of new skilled roles. We know this. It's already happening, and will see hospitality workforces shift dramatically in the future. But right now, we need tech to attract people, not replace them. The current labor shortage crisis can only be solved by bringing people back to hospitality. We need technology to reconnect employers and candidates, to redefine what work looks like and re-engage workers who are moving away from service industries. The core hospitality sectors of hotels and restaurants need to better-utilize the gig economy and embrace more cost-effective marketplace solutions, instead of clinging to outdated and RevPAR-damaging recruitment models. Platforms like The Hospitality Gig, MogulRecruiter and Caterer are all using algorithms, AI and big data to connect businesses with the labor they need, while also providing a more flexible solution to the ebb and flow of demand for low-skilled positions. High-tech robots are coming, but right now we need high-tech recruitment.

Laura Calin · Answer

As hotels staff-up post pandemic, many are moving employees to different roles, others are shuffling staff between properties to meet customer demands, and some hiring staff that are brand new to the hospitality industry and will have a steeper learning curve. One way technology is helping hoteliers tackle this massive issue is through digital learning. As these classes and refresher sessions can be accessed at any time, from anywhere, it is a faster way to onboard new staff or help others learn new skills than in-person onboarding experiences. We offer our customers access to Oracle University, a free digital learning destination, where their staff can login to learn the property technology needed to do their job, update product knowledge, and learn new job skills.Another key tech area - contactless technology - became a necessity during the pandemic, but is now here to stay. Guests who would like to limit face to face interactions can choose to use contactless technology for check-in and communicate with staff through digital messaging during their stay. Travelers can also enable room keys via their smart phone – limiting lost cards, plastic waste, and saving staff countless hours redistributing lost keys. This also extends to payments, enabling guests to do everything from pay for their room, extra amenities, food, drinks, and more via a website and proprietary hotel or third-party apps. This all adds a layer of convenience to guests, while helping hotels maximize a smaller workforce. By eliminating low-value tasks, the more limited workforce can focus their time on interactions that really enhance the guest experience.

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