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July 16, 2019

3 Ways to Improve Hotel Operations and Reduce Labor Costs

David Wang

2019 Reduce Hotel Cost Blog

As labor costs continue to rise and revenue growth begins to slow, hoteliers are looking for ways to improve operational processes and increase employee productivity, without lowering the quality of service for guests. 

A recent report from HVS  stated that the rise of labor cost is due to the increased difficulty in hiring qualified staff at a competitive wage along with stricter immigration policies that have reduced the amount of available immigrant workers that hotels have relied on as the main source of employees, especially at line-level positions. 

In fact, the report found that labor costs are rising 5%-6% in some cities, which surpasses the RevPAR gains that have slowed to 1%-2% range. With occupancy forecasted to grow just 0.2% this year and again next year, savvy hotelers are preparing for a potential downturn now. 

“While it may be too early to officially announce the death of the cycle, it seems clear that we are in the early stages of a downturn,” recently wrote David Loeb, a columnist for HNN.

Smart hotel leaders are now taking assessing their operations and looking for areas where efficiencies can be found. Hotels must find ways to get the most out of every employee and equip them with the right tools to work efficiently. There are various ways that this can be done.

Staff Cross-Training

In order for staff to be at their best, they need to be trained properly. It’s a given that employees should be trained for their hired role, but it’s equally important to cross-train employees to handle other things outside of their day-to-day. The key is to cross-train employees in similar areas where they can quickly move from one department to another. For example, housekeeping can help with simple maintenance tasks or a concierge taking on check-in duties during busy times. 

“With cross-training, fewer employees can work full-time and save on overhead costs, which in turn increases profitability and employee satisfaction,” said Mark Heymann, co-founder and CEO of Unifocus (Workforce Optimization Solution), in a Hotel Business article. “For smaller properties, this becomes even more important.”

Employees that are cross-trained can better understand how the hotel operates in different areas and how they all work together. Additionally, employees who have experience in more areas of the hotel have an advantage when it comes to growth in their career. Positioned, and handled correctly, it can be a win-win for hotel managers and employees.

Improve Processes through Technology

Poor or outdated processes are major contributors to increased costs. Again, it’s about optimizing the employee’s time by reducing the amount of manual work that is required to perform a certain task. 

For example, the check-in and check-out process has been a pain point for hotels. On busy days, lines can get long, staff get overwhelmed and guests either begin or end their stays frustrated. Providing a solution like mobile check-in and -out enables guests to bypass the hassle of going to the front desk, while freeing up time for staff to handle more complex issues. 

Other technologies like self service kiosks and mobile messaging can also help streamline hotel operations without sacrificing the quality of service. For example, by integrating a mobile messaging system with your hotel property management system or service optimization software, a guest can simply send a message to the hotel to request extra towels, while in the backend, the service ticket is being automatically created without the need for a staff member to write it down manually. It both speeds up the service process while reducing the chance for human error. 

Going green can also help hotels reduce costs in a variety of ways. Many hotels have adopted eco-friendly initiatives by enticing guests to forego housekeeping in order to save on both housekeeping labor costs as well as energy and water costs. 

Leverage Data

We now live in a digital world where data is plentiful. However, it’s important for hoteliers to know how to use the data that is available to them to improve operations and reduce costs. 

By analyzing historical trends in occupancy, hotel managers can make a more informed decision on forecasting budget and staff needs. The same analysis can be applied to onsite restaurants, bars and other outlets to optimize staff schedules and supplies.

Online reviews and internal guest feedback can also be a useful source for identifying pain points in the guest experience, which may be caused by operational inefficiencies. By doing a quick search for specific keywords within your feedback data, like “service” or “bad,” it will help you uncover issues that guests have and enable you to improve processes that make your staff more efficient.

Conclusion

As costs continue to rise but revenue growth begins to slow, or worse, hoteliers must start looking at ways to reduce costs in order to maintain profit margins. By leveraging a combination of training, process optimization and data, hotel leaders can be better informed on where costs can be cut and efficiencies gained without sacrificing the guest experience. 

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