What If? Three Strategic Shifts in Labor Could Be the Answer

Written by Arlene Ramirez, MBA, CHAE, CHE, CHIA

“It didn’t take guts to follow the crowd — that courage and intelligence lay in being willing to be different.”

– Jackie Robinson

Today many hoteliers have pondered many ideas to adjust their business strategy, all the while asking themselves: “What if?”. The effects of COVID-19 continue to linger, with many parts of the world either experiencing improvements or preparing for more lockdowns. As the weather changes, cautious behavior increases and new rules by governing bodies emerge.

Keeping a positive perspective can be difficult. Those who take the time to reset, analyze the business from different angles with no preconceived ideas and allow for more “what if” questions, may find new strategies that can prevail long after the pandemic.

This is easy enough to say. So, what are some of the “what ifs” to consider?

A Close Look at Cost Structures

First, businesses should begin to reanalyze their cost structures. Successfully maneuvering through these times, management’s first step is to look at fixed costs, eliminate as many as possible and shift to a more variable cost focus. Recall variable costs only increase with volume; therefore, increasing variable costs will reduce the leverage brought on by fixed costs.

Traditionally, reducing management positions, which is fixed payroll, and eliminating contracts for services no longer required will bring down those fixed costs. Consider the impact on operations when reducing staff, as it could affect current business levels and the hotel’s reputation in the market.

What options are available to hotels when it comes to maximizing the use of their team and minimizing total labor cost? Three possibilities should be considered by hotels:

  • Replace positions with technology
  • Centralize functions
  • Diversify the job responsibilities and skills of staff

The use of technology in hotels has increased since the onset of COVID-19. Primarily automation has seen the focus shift to touchless experiences that mitigate the spread of the virus on surfaces. Many hotels have sought to further the use of technology to replace repetitive tasks; however, in the short-term, this may not necessarily reduce labor and can increase overall costs. Staff must monitor and address those functions that technology cannot handle or that requires human interaction. Capital investment can also limit the type of technology that can be employed to reduce labor costs.

The next option is to centralize labor, which can help provide consistency and even increase collaboration. Cluster services can produce new strategies to improve the overall performance of assets under management. While there are many positives with this option, the lack of onsite management and perhaps lack of experience in a specific market could have negative impact.

One option — which should have already been a best practice for many — is finally being considered more mainstream and implemented by hotel operations: cross-training. Cross-training and less structured job descriptions and positions within a hotel are now tools to reduce and control labor costs. Those with collective bargaining agreements (union labor) may not have this option.

Diversifying Job Responsibilities

What does this diversification of job responsibilities mean? What if this strategy allows the future hotel employee to become a property ambassador? An employee scheduled to work will clock in and may typically work as a desk agent, but today the need is in housekeeping. The first four hours of this employee’s shift could be in the role of room attendant. After the regular 30-minute break, the employee goes back to the desk to resume desk agent responsibilities, assisting guests as necessary. The same employee returns the next day to work the first four hours of the shift as a front desk agent, and after a 30-minute break, the rest of the four-hour shift will be working in accounting as a group billing coordinator.

One employee can work in multiple areas due to cross-training that has provided them with the skill set to be more valuable to the hotel. The hotel operations have less last-minute scrambles to fill labor needs for the day’s demands, knowing that they can shift employees from areas where there is less demand to those with high demand.

Pre-COVID-19, many hotel positions were always open, or a candidate found for a specific job may have only stayed for a month, making turnover an issue. What if employee recruitment focused on individuals with an attitude of wanting to learn the entire operation? This actually builds the bench strength of a property. A hotel operation would now have a new perspective on managing and controlling labor costs. Diversifying a hotel team’s skill set can reduce the use of contract staff, increase morale and create future career opportunities within the organization for team members. This practice helps employees develop considerable new skills and allows them to envision the big picture.

Creating a skill-diverse team is not easy, but investing the time to develop skills and cross-training will provide a return on investment through reduced costs, and perhaps increase revenue due to an improved guest experience. Training costs are often the first to go. What if, instead, employee training costs were similar to capital expenditure or renovation cost? What if these costs were part of the strategy to increase the value of the asset? Assets can turn into cash or provide some future economic value to the business. Employees are an asset to a hotel, which is not reflected on the balance sheet, but is a critical element to making the entire asset increase in value.

Technology is excellent. Combined with a good team of employees with various talents, it could address one of the largest expenses in the hotel industry. Hospitality is a people business. When the gates open and normalcy comes back, will we want to speak with technology or a live person?

Guests may get used to the convenience — but what if hotels look at how to integrate both technology and staff with a diversity of skills to enhance the experience for both internal and external guests, while maximizing the value of both as on- and off-balance sheet assets?

Arlene Ramirez

Arlene Ramirez, MBA, CHAE, CHE, CHIA (@ArleneDRamirez) is an HFTP Global past president. She is principal at Ascend and ADR Hospitality Consulting, and she is on the faculty at the C.N. Hilton College, University of Houston. Ramirez is also a frequent speaker at HFTP Global events and author of numerous HFTP-supported industry reports.

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