The labor and energy crises are having profound effects on the hotel industry, but speakers at the 34th Deloitte European Hotel Industry Conference said the impact doesn't have to be all negative.
Amid the challenges of a labor shortage and the rising cost of energy, hoteliers can fine-tune strategies to improve hospitality for both the workforce and guests.
“We have the ability to be more attractive and career-[oriented],” Steve Walker, principal of strategic operations at KSL Capital Partners, said during a session titled “How can the industry navigate the storm?”
“Inflation is good in that we can put resources into businesses that we believe in,” Walker added.
Dermot Crowley, CEO of Irish hotel firm Dalata, said it's easy to treat employees right.
"Simply, we must treat people better, as you would your son, daughter. It is still seen as a very poor business to be in. We need decency across the board," Crowley said.
He said hoteliers must be upfront and pay employees more.
“Housekeeping has been a particular problem in Ireland. Give [employees] real interaction with other people, as this will shape their lives and careers. Flexibility is the real advantage we have in this industry,” he said.
Crowley cited the flexibility of one of his hotels that offers four-hour shifts that fit in between dropping children off at school or nursery and picking them up.
Emma Underwood, general manager of Midland Grand Dining Room, which opens next spring at London’s St Pancras Grand Hotel, said she started her career working on the floor of a restaurant and urged hoteliers to remember where they first started.
“After the pandemic, employees looked first for safety, then social. Now it is not to be too stressed,” she said.
One of her initiatives is to provide employees quality dinner.
“Most work canteens close at six, just when [food and beverage] starts, so provide food, and good laundry facilities for staff as energy is a problem. Look to their happiness and well-being. Listen and be hands-on with hiring, even if you are working with agencies,” she added.
Crowley said such beneficence has a huge influence on staff retention.
“Inflation is higher for a lot of our staff as their incomes are lower, so if we can provide healthy meals, that is a fraction of the cost to us as it is to them,” he said, adding company human resources have been tasked with looking out for staff members who could be suffering economically or mentally.
The overriding concentration must be on increasing awareness that there is dignity in all hotel industry roles, in both front and back of house, Walker said.
Underwood agreed.
“Allowing staff to use the different skills they have been taught or have is such a boost to their morale, and provides them the skills to be a mentor,” Underwood said.
Crowley said he prefers to pay fewer people more, rather than more people less.
Another initiative at Dalata is providing housekeeping staff cordless vacuums, which he said saves 50 seconds on cleaning a room, are more efficient and more enjoyable to use.
Walker said another goal for the industry should be the complete democratization of tips.
Cost Cognizance
Panelists said cost-saving initiatives in operations and development can be put in place, but additional expenses should not all be passed on to the consumer.
Average daily rate has a ceiling especially when inflation and rising costs — including the cost to heat their homes this upcoming winter — are seriously affecting guests’ living standards.
“How do we appear good value for money for both those people who come three times a week for a salad and a glass of wine and for those who come once or twice for a blowout meal?” Underwood asked.
Walker said it's critically important to evaluate a building's energy use to ascertain what risks it exposes the business to.
“The need to underwrite energy adds more pressure on a hotel to perform,” he said.
Walker said his own experience is that he is paying six times as much for energy as he was only a few months ago. He had a couple of frightening days when energy costs started to spike, but realized it will be worse for some.
“[Energy] is the largest line of expense outside of payroll, but the degree of sophistication in energy hedging is in direct comparison with the size and sophistication of the company. Smaller businesses will be the ones that will hurt,” he said. “Investment in energy now has a return on investment that makes far more sense for capital."
Crowley said hoteliers need to talk to one another as everyone is “at ground zero looking at this, and there is a lot we need to understand. It is getting more complex.”
He said the industry understands targets, so the right measurements need to be formulated and adopted.
“We are making sure we hire facility managers who understand their hotel, the science and the portfolio,” he said.
Crowley added that cost increases “will never go to the point where it will impact on the guest experience.”