News / Featured, Hospitality Trends, Management

Five Reasons Why GMs Need to Plan for Higher Expectations

How GMs Manage Higher Expectations for Quality Will Determine Winners and Losers

Leaders in the hospitality industry have walked a fine line throughout the pandemic. To put it mildly, rising labor costs and an ongoing labor shortage have made navigating the recovery period difficult. There is growing evidence that things are about to become even more complicated.

Quality scores and guest ratings are more important than ever to many properties, so putting your best foot forward and earning those 5-stars will determine who wins and who loses in the coming months.

Hotels Aren’t Airlines

While airlines have faced their own challenges as a result of the pandemic, there is one important fact to remember: hotels face less competition than air travel. Following 9/11, there was a sea change in how people interacted with airlines, with increased security, fewer services, and less flexibility. Hotels, on the other hand, have seen fewer changes as a result of these major events. This is largely because there is simply more competition in the hotel industry. There are more hotels on the market, and they are all competing to offer the best deals.

Competitive Advantage

While competition may seem like an ugly word, it really isn’t. Hotel guests don’t commodify their experiences. Sure, online bookings have pushed pricing forward, and quality scores are more important than ever, but hotels can compete above the level of a commodity by providing high-level services such as daily housekeeping, room service, 24-hour gym access, and other valuable amenities. In the end, it’s all about the guest experience, which is what distinguishes a hotel from merely a place to sleep.

Penny for a Pound

While labor rates may appear to be exorbitant, the comparative cost of labor in cleaning a room is quite low. The labor portion of cleaning a room can be less than $10, depending on the overall labor rates and effective wage after payroll taxes, benefits, and so on. While not insignificant, it is a relatively inexpensive way to differentiate a service. Simply put, many hotels are experiencing a significant increase in demand; as a result, they are understaffed and are delaying hiring. However, focusing solely on this one issue can cost a property in a variety of other ways. While there is a cost to hiring labor, there is an even greater cost to failing to hire ENOUGH labor.

Flexibility Wins

The ability to provide guest satisfaction is at the heart of the hospitality industry. Offering daily in-room cleaning is one way to set a hotel apart from the competition, but flexibility is still crucial. As a result, contract labor is critical to a property’s recovery strategy. Offering guests services that they took for granted prior to the pandemic may appear to be a luxury post-pandemic. Spending less than $10 to do so is a bargain, but doing so without expanding payroll is even better.  Contract Staffing lets you do exactly that.

Focus on Guests – Outsource the Rest

While contract staffing provides flexibility, many hotels still view it as an “expensive” option. In fact, when taxes, benefits, recruiting costs, and PTO are taken into account, contract staffing raises the cost of cleaning a room by only a few pennies. While high labor rates may make recovery more difficult for many properties, failing to hire enough staff will deprive them of long-overdue profitability.

Summary

While dealing with the significant challenges of the current recovery period may appear overwhelming, it is critical to seek competitive advantages that will attract guests and convert them into long-term, loyal customers. Guest satisfaction scores have reemerged as a key metric, and providing bonuses such as overnight room cleaning is a relatively inexpensive way to attract and retain guests. While labor issues may appear insurmountable, there are some ready-made solutions that will enable GMs to provide amenities without breaking the bank. Ask us how.

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