Driving Success Despite Challenges in the Hotel and Hospitality Industry
After laying off portions of their staff last year, hotels and hospitality businesses are having a hard time regaining workers’ trust and convincing them to return to their old jobs and old ways of doing things. Staff workers are worried that if they return to their previous employers, they could be abandoned with no safety net all over again, according to David Kong, CEO of BWH Hotel Group.
“The baggage we carry as a result of laying off so many people in the pandemic … That is a hard one to overcome,” said Kong at the NYU International Hospitality Industry Investment Conference, as covered by Skift magazine.
This sector is also grappling with a high turnover rate on top of rising customer expectations – all of which makes driving profitability and revenue growth all the more difficult. There are many ways hotel owners and operators can address these challenges, strengthen relationships with their employees and provide better service to their guests. By exploring the new benefits available in today’s market, leaders can determine which solutions can best support their businesses.
Learn about five current challenges in the hotel and hospitality industry, and the solutions that may help business leaders navigate these turbulent times.
This post is part of a larger series, so check back soon for more insights for the Hotel and Hospitality industry.
1. Employees Reluctant to Return to Old Jobs
Between 2020 and 2021, U.S. hotels lost nearly $112 billion in room revenue.² Due to that financial loss, the industry was forced to lay off a portion of their workforce. This industry already struggled with unemployment rates of almost 3x the national average pre-pandemic.¹ The massive layoffs have contributed to resentment and reluctance among former hotel and hospitality employees, leading to a shortage of workers willing to go back to this industry.³ Now, 45% of former employees report that they are seeking jobs with higher pay, while 29% are in search of improved benefits.³ In order to stay competitive, it’s up to employers to hear their employees’ concerns and decide the best ways to incentivize them to return to work.
2. Turnover High with 74% of People Leaving Jobs
The hotel and motel industry has an average employee turnover rate of almost 74%.⁴ High turnover causes disruptions in hotel operations and the ability to provide a quality guest experience, and costs companies money and resources to constantly hire and train new staff. Former hospitality employees cite stagnating wages, stressful work environments and lack of recognition as some of the reasons they’ve left their jobs.⁴ To try to increase retention, hospitality industry leaders should consider introducing flexible working options, innovative benefits and improved technology in efforts to improve the employee experience.
3. Too Few Employees to Meet Guest Expectations
According to hospitality leaders, consumer expectations are on the rise. Since customer satisfaction drives repeat business and referrals, hospitality managers need to ensure they’re meeting these expectations.¹ However, this is especially difficult when many hotels are short-staffed and unable to provide the same level of service.¹
“We’re all seeing our customer satisfaction scores in this industry, across the board, go down. Fundamentally, we just don’t have enough people in the workforce,” said IHG Hotels & Resorts CEO, Keith Barr, as reported by Skift magazine.¹
Frustrated, overworked employees struggle to provide the same guest experience as employees who feel they’re being treated well.⁵ Happier employees provide better customer service, which can build repeat business with guests.⁵ Finding creative solutions to make employees feel valued and address issues with turnover at the root is a valuable way to combat this vicious cycle.
4. Supply Chain Issues Disrupt Hotel Practices
As the cost of gas rises, so does the price of booking a flight.⁶ But travelers aren’t completely canceling those beach vacations or winery tours – instead they are choosing to stay closer to home for vacations or book more affordable accommodations.⁷ This trend means certain hotels are actually experiencing⁸ an influx of visitors, while they also struggle to stock supply rooms as global logistics issues have made it harder to get basic necessities such as linens, food and beverage supplies, and cleaning and housekeeping supplies.⁹
While these supply issues are an inconvenience for guests, they may also frustrate employees who may struggle to meet customer expectations if they’re lacking essential resources.
5. Rising Inflation Requires Creative Solutions
Hotels are forecasted to increase room rates by 13% in 2022 as they experience rising costs of labor, food, beverages and other resources.¹⁰ At the same time, hotels have cut certain services, such as daily room cleaning, because of understaffing or concerns around the spread of Covid, and hotel guests are essentially paying more for less service than they’re used to.¹¹
To help employees who are frustrated by customer demands (and a lack of resources), some hotels are considering increasing wages, but an increase in wages is a choice with potential drawbacks..¹² Identifying other ways to meet employees’ needs without making this change may be more financially feasible in the long run.
On-Demand Pay May Help Hotel and Hospitality Companies Overcome These Challenges
In order to meet the above challenges and other industry pain points, hotel and hospitality companies should prioritize the employee experience. An engaged, motivated and happy staff will be better equipped to provide quality customer service than an overwhelmed workforce. In turn, positive guest experiences may drive repeat business and long-term value for these companies.⁵
Giving your employees access to on-demand pay is a great way to show employees how much they’re valued so they’re more likely to stay. Having access to their earned wages can help employees improve their financial wellness, pay their bills on time and ultimately stay in their jobs longer.
Want to learn more about how DailyPay can help your business work to recover from “The Great Resignation?”
1 https://skift.com/2021/11/08/hotel-ceos-concede-labor-shortage-is-a-structural-problem-that-may-reshape-guest-experience/:DailyPay, 2020
2 https://www.foxbusiness.com/lifestyle/hotel-industry-recovery-2022-bumpy-road:DailyPay, 2020
3 https://www.businessinsider.com/labor-shortage-hospitality-workers-restaurant-hotels-pay-wages-joblist-survey-2021-7:DailyPay, 2020
4 https://harver.com/blog/causes-of-employee-turnover-in-hospitality/:DailyPay, 2020
1 https://www.forbes.com/sites/blakemorgan/2018/02/23/the-un-ignorable-link-between-employee-experience-and-customer-experience/?sh=21660bfa48dc:DailyPay, 2020
6 https://www.whsv.com/2022/03/09/high-gas-prices-will-start-affect-air-travel-aaa-mid-atlantic-says/:DailyPay, 2020
7 https://skift.com/2022/03/08/u-s-road-trips-still-a-go-with-higher-gas-prices-but-heres-what-changes/:DailyPay, 2020
8 https://www.cnbc.com/2021/04/28/hotel-rates-on-the-rise-as-travel-demand-ticks-up.html:DailyPay, 2020
9 https://www.hotelmanagement.net/operate/ahla-supply-chain-issues-affect-hotel-operations:DailyPay, 2020
10 https://skift.com/2021/11/17/global-hotel-rates-could-be-4-times-inflation-in-2022-new-report/:DailyPay, 2020
11 https://www.usatoday.com/story/travel/hotels/2022/05/26/hotel-housekeepers-pandemic-daily-cleaning-cutbacks/9939856002/:DailyPay, 2020
12 https://hrdailyadvisor.blr.com/2021/04/15/pros-and-cons-of-increasing-your-starting-pay/:DailyPay, 2020
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