Excerpt from CoStar
Hotel Operators Focus on Efficiency To Protect Profits
As rising costs and wages threaten hotel profits, experts said hoteliers should be using the data they have available to them to cut down on staffing and ensure profitability.
Rising cost pressures, particularly from skyrocketing wages, are making it more difficult to maintain profits at hotels, but hoteliers say a combination of strong rate growth and more efficient operating models have helped keep their businesses thriving.
Speaking during the "The Lean, Mean (and profitable) Operating Machine" session at the 2022 Hotel Data Conference, Andrew Rubinacci, executive vice president of commercial and revenue strategy for Aimbridge Hospitality, said wage increases are now a universal phenomenon.
"We've kind of reset the industry and reset labor prices," he said. "A lot of people left and we need to incentivize people to come back to the industry. You see that across the board. Housekeeping and front desk [wages] are the ones that really went up the most, and [salaried positions] are starting to follow, although it's a little less volatile."
Eve Moore, divisional vice president of operations for Remington Hotels, said one thing hoteliers must do now is take a closer look at data and make sure they're using all the business intelligence tools they have to avoid overstaffing.
"One example is we were able to see that food and beverage was really recovering faster on the weekends, and that helped us schedule more effectively with a smaller number of folks," she said.
She said Remington has a team at the corporate level whose specific goal is to help under-performing properties best allocate resources to areas that maximize guest experience and cut down on costs. She said having that corporate-level support is key.
"We're talking to our [general managers and operations managers] and folks that are still kind of struggling sometimes to get through the day to day with the volatility of staffing," Moore said.
Lars Schrader, vice president of operational strategies for Atrium Hospitality, said the labor environment has eased somewhat over the past few months, but his company is still operating at roughly 85% employment levels compared to 2019. He said various parts of the business, from rooms to food-and-beverage outlets, have ramped up employment in tandem with demand, and he thinks that will continue into the new year.
"My personal opinion is I think that in 2023, we're going to see a lot of hotels back to [employment] levels that they were in 2019," he said.
Evan Wimpey, director of analytics strategy for Elder Research, said coping with day-to-day volatility is a key challenge for hotels looking to streamline operations.
"It comes down to being able to staff appropriately," he said. "Staffing is a challenge for everybody, but we certainly hurt the bottom line when we're overstaffed for a day when there's perhaps not as many people."
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