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Looking At Labor Challenges

Minimum Wage Increases, Thriving Economy Among Top Issues For Lodging Industry

Monday, March 11, 2019
Dennis Nessler
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The ability to attract and retain qualified labor remains one of the top challenges for the lodging industry going forward, particularly in light of a thriving economy with low unemployment and increasing competition from other consumer-based businesses.

Andrew Hazelton and Matt Peterson, managing directors of AETHOS Consulting Group--a global hospitality advisory firm--and it's Philadelphia and Los Angeles subsidiaries, respectively, provided some perspective on the overall labor market in general and commented on some of the specific trends impacting the workforce today.

For example, recent increases to the minimum wage in states such as California has the potential to negatively impact hospitality giving many entry-level workers the ability to find comparable paying jobs elsewhere.

“In hotels, and certainly in different departments, we ask a lot of our staff. To see a neighbor or a family member going across the street and working at the local Chick-fil-A or the local fast food restaurant for the same wages, better hours, and not as demanding work it makes it very difficult to attract and retain that talent,” noted Peterson.

He further added, “California is a great example of where the country is going in terms of minimum wage and therefore I see us having to be smarter about how we are interacting and engaging with our employee base. Because at the end of the day they’re the first line to the guest and if we can’t have those people that can tell the story and represent the brand or the company we’re fighting an uphill battle from the get-go.”

Hazelton added that in addition to the minimum wage issue, increased competition, both within the industry and outside the industry, has upped the ante for hotel companies to focus heavily on employee retention.

“Organizations really have to do their best to have an engaged workforce and really treat their employees as their number one customer. It is very important to do so, because not only can an individual at a Marriott walk across the street and go to a restaurant but they can also go to a Target, for example. There’s definitely competition within these highly customer-centric businesses that we’re in. It’s of the upmost importance to really make sure that employees are highly thought of and really feel valued and have a connection to their organization,” he maintained.

But as the lodging industry continues to evolve, along with technology, the executives acknowledged that there are additional career opportunities available.

“If you look at the number of different brands and independent companies that have popped up over the last 5 years there certainly is and will continue to be a need or demand for creative operators; [people] having the creative and analytical skills in everything from operation to revenue management to sales and marketing. In the digital age we’re in there’s a tremendous opportunity for the next generation of hoteliers to create new opportunities and roles,” maintained Peterson.

Hazelton pointed out the lines have blurred among the sales, marketing and revenue management functions with the latter taking on added importance.

“Organizations are moving to a model where such functions are really one single point of leadership, which is allowing them to put an expert in place to help them make strategic decisions that really make the business more efficient. We do feel strongly that that’s going to continue over the next couple of years. If you just look at it organizations have kind of been slowly adopting that model one after another,” he said.

The strength of the current U.S. economy, among other issues, could actually be working against the lodging industry when it comes to the labor force, according to Peterson.

“You look at low unemployment, and the challenges with visas and bringing in labor from outside the U.S., and I think more so than ever it’s important for that employee engagement. At the end of the day the number one referral and the best hire you can make is from a team member,” he said.

Peterson further discussed ways hotels can reduce the impact of the aforementioned factors. “If you are an employer of choice, if you are engaged and connected with your employees--top down literally from the corporate offices down to the front-line staff at a hotel property--you’re able to put systems in place and referral programs in place to incentivize but really to get the best of the best and to have your employees talking to their friends about how great a company you are. We always focus so much on online and social media and what are our guests are saying about the hotel? How can we get those guests to come back for another stay? If there was an Intranet where we’re getting employee communication what are they saying to their friends about the company? What can we do to impress upon them the value of getting people that they respect and think would be good co-workers to come work for the company?” he stated.

The pair was asked what advice they would give to hotel owners and operators when it comes to staffing and creating a successful culture.

Peterson touted the value of getting feedback from employees through satisfaction surveys. “The number one thing with the survey, regardless of where it comes from, is to make sure you have a planned message to share with your employees prior to that survey,” he said.

“Making sure that engaged culture is instilled in that organization is highly important for its success. Out of all the benefits, employee engagement should be top of mind. Making sure you have that culture that values an employees’ opinion and gives your employees the tools necessary to grow within that organization that’s really where I would council an owner or operator to focus their energy,” concluded Hazelton.

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Dennis Nessler    Dennis Nessler
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