ATLANTA — The hotel industry’s major operational headaches around labor, pricing and supply-chain issues may be improving, but they’re not gone yet.
Hotel asset managers have put new strategies into play to alleviate the stresses associated with the lingering effects of the past two years.
On the labor front, asset managers speaking on a panel at the recent Hunter Hotel Investment Conference said there has been an uptick in employees entering the industry, and employers need to be more committed than ever to create a work environment that retains people.
Adopting flexibility around hiring, training and payment is a cornerstone, they said.
“One of my initiatives has been pushing back a little on human resources,” said Amanda Chivers, managing principal of Crown Hospitality Consulting. “HR and personnel departments sometimes tend to look at criteria and metrics and vet potential candidates using an outdated perspective. They were overlooking and missing a lot of good, qualified candidates.”
Chivers said she’s also pushing HR departments to pay attention to turnover at their companies and hotels, and to make sure they’re doing exit interviews to zero in on ways to improve culture.
Steven Nicholas, principal and executive vice president of Noble Investment Group, said many hotel management companies are focusing on recruitment and retention, while changing internal systems to accommodate the flexibility new hires want.
“We’re seeing more part-time workers, changes in incentive programs, companies having the technology to be able to provide daily pay and other things that offer more instant gratification,” he said.
Other benefits are companies moving up the vesting period for 401(k) retirement accounts and moving up the start dates for company-provided health insurance to take effect, he said.
But while employee numbers are trending upward, hotel operating models are in many ways permanently transitioning to less reliance on human labor and more on technology.
At least that’s the long-term goal, asset managers said.
“It’s all a combination of using the labor you have, changing the models and using technology, plus changing customer tastes,” said Larry Trabulsi, EVP of asset management at CHMWarnick. “If you had three restaurants, can you get by with two? If you had two, can you change one to a grab-and-go option?”
Cross-training employees is a key component of adopting an on-property hotel operating model that is less labor-heavy, but it requires a lot of time and money investment, particularly since many new hires may not come from the hospitality industry.
Chivers called training “critical right now.”
“We’ve been bringing anyone in, and that leads to turnover if you don’t have great training and culture,” she said. “We’ve started retraining everyone on the team because there’s been so much turnover, which leads to inconsistency. I can’t underscore enough how important training is because it’s so hard to optimize operations when people don’t fully understand their role.”
Cross-training has historically not been adopted in hotels staffed by union employees, but Sarah Gulla, senior vice president of asset management for Pebblebrook Hotel Trust, said that’s not sustainable.
“We have to do a better job as an industry of getting people out of their boxes when we can,” she said. “Operators have to have hard conversations with unions in order to get people back to work. We need a sustainable model and [cross-training] may be it.”
Business, Group Return
Asset managers on the panel all said they’re happy to see business-transient travel picking up, along with the rates that type of travel commands.
“Every time I hear a big company say they’re returning to the office, I do a little happy dance because it directly impacts our business,” Chivers said.
Trabulsi said the boost in business-transient demand has picked up even in the past four weeks.
“Know your top demand generators and their back-to-office plans and be out in front of it,” he said.
Companies returning to offices means in many cases that they’re cleared to hit the road again for business travel, but it also signifies an uptick in small social business at hotels, as offices look for private event spaces for small meetings and after-work social gatherings.
While large, citywide events fill rooms quickly, Gulla said “hotels can’t rely on that,” particularly since it will take a while for large events and conventions to return to group-friendly cities in full force.
“Hotels have to find small, in-house groups and that’s what we’re seeing. They’re making group numbers the hard way — a high volume of smaller groups.”
Supply-Chain Worries
Hoteliers by and large have not be able to find a quick, sustainable solution to the problem of product shortages due to supply-chain slowdowns.
“It sucks. Let’s just start with that,” Nicholas said. “Everything is unpredictable, whether it’s getting supplies for renovations or higher shipping costs for materials, but everyone has this problem. Brands have set standards, but if you can’t get a coffee cup, you’re struggling to serve coffee.”
Gulla said the ideal process is to plan as far ahead as possible for capital projects and be able to jump on stockpiling some supplies when they’re available.
Still, Chivers said, property-level management has to be able to make do.
“We’re making Costco runs,” she said. “You have to do what you can to meet demand. You have to be agile and nimble and adjust on the fly.”
Organized third-party management companies make a difference, too, Nicholas said.
“There are management companies with the resources to adapt,” he said. “This is where the strength of management companies and people make a difference.”