I started my hospitality career during the '90s, at which time senior leadership came from operations. We all have that role model of a general manager or CEO who worked his way up from bellboy or line cook. It was a time when delivering quality to guests was at the core of shareholders' expectations.
With the turn of the century, brand loyalty became paramount. Running a successful loyalty program required scale (more guests) and distribution (more hotels). Also during that time, competition intensified, especially between big players who were growing organically (one hotel at a time) and inorganically (through mergers and acquisitions). Since scale and distribution were the goals, growth became the top priority. Furthermore, the asset-light strategy (selling hotels) allowed brands to trade in expensive buildings for distribution via licensing agreements.
This change in focus turned development and finance experts into rockstars at hotel companies. Conventional operational knowledge was subordinated to the financial ability of increasing the footprint with little capital. Development, corporate finance, asset management and legal counsel instantly got an important seat at the table. Unsurprisingly, this triggered the rise of deal-making CEOs that came from those disciplines.
Today, the pandemic and its recovery has showed us that human resources should be the new core of the business. As COVID-19 proliferated, several hotels had to close their doors, leaving millions of workers temporarily or permanently jobless. It was the HR professionals that had to do the heavy lifting of reducing teams at the very minimum, motivating those who stayed, and caring as much as possible for those who had to leave. An impossible balancing act that in many cases had the additional challenge of needing to be done remotely.
As hotels reopened in 2020, human resources departments had to provide a safe work environment for associates. Keeping those with preconditions at home, ensuring social distancing at work, providing protective equipment, and deploying COVID testing were among the new tasks HR needed to oversee. At the end of the day, stopping COVID and saving lives topped the companies’ priorities, and human resources was charged with that complex mission.
With vaccine availability, business resumed unevenly. By the middle of the year, some destinations were experiencing more demand than they did pre-pandemic. Florida hotels, for instance, had a better summer than they did in many preceding years.
Locations that experienced an explosive recovery had a problem in common: a lack of staff. Not being able to satisfy demand due to a worker shortage is another unprecedented challenge in our industry. While many reasons have been attributed to the labor scarcity, the uncomfortable truth is that less people want to work in hotels than before.
As the rest of the world recovers, the pressure to find workers will intensify. Major hotel brands will only be able to grow if they are able to staff the new hotels. Management companies will have to find creative ways to recruit and retain their talent. Owners will need to invest in technology to reduce the full-time employees required to serve guests. Ultimately, the entire industry needs to get together to tackle the big challenge of improving the quality of jobs it offers, thus attracting new generations to join the team.
Here is where our human resources colleagues have an abundance of experience and must lead the way. To that end, a good first step into a labor-centric strategy would be appointing a CEO with human resources experience.
Hugo Desenzani is Chief Executive Officer of Intursa (Libertador Hotels, Inversiones La Rioja).
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