AAHOA Panel During BITAC Owner’s Event Dissects Current Labor, Profitability Challenges
Labor, amenity creep and ongoing advocacy efforts—such as trying to preserve the 1031 Exchange program—were among the key topics discussed by a handful of AAHOA [Asian American Hotel Owners Association] members at BITAC Owners Live 2021 earlier this month.
Taking place at Grand Hyatt Baha Mar in The Bahamas, the hoteliers took part in a panel discussion entitled “Industry Issues: Hotel Leaders Dissect Key Topics For ’22.”
There’s little question that the ability of the lodging industry to attract and retain qualified labor has become compromised in recent years, particularly in the wake of the pandemic. The panelists acknowledged that the leverage is very much in the hands of potential employees at this time.
Imesh Vaidya, CEO, Premier Hospitality Group, cited a change in policies at large companies like UPS, which has lowered its ‘time for job offer’ from three hours to 10 minutes. Vaidya noted that his company is following suit in its training efforts.
“Basically you’re going to make sure the person that’s in front of you that has expressed interest, you’re going to go ahead and give them an offer. You’re going to have to worry about their training and their qualifications afterwards. You’re not going to give them a list of qualifications prior to their arrival to the interview because at that point they’ve already received two or three offers,” he said, later reiterating, “if they’ve showed interest you need to give them an offer.”
Nimisha Patel, managing partner, Vue Hotels, also noted that “everybody is having this trouble” when it comes to labor and emphasized working with prospects.
“In general, I think one of the things that we also need to recognize is that it’s not just about who’s coming in the door or if they’re coming in the door, but it’s recognizing what they want and what you also need. We’ve started to listen more, really engage and tailor things and be flexible with scheduling whether they’re home or at work. That’s something that’s here to stay and it’s needed to be able to retain those employees,” she noted.
Ankit Panchal, CEO, 365 Hospitality, pointed out the company has made a concerted effort to engage with employees and learn about their personal life and incorporate family members into the culture.
Panchal further noted that the company added a new wrinkle specifically when it comes to back-of-house employees.
“One thing we did which was pretty creative and worked out pretty well is we advertised that we would pay daily. We worked out with a company where we offer daily pay and that has been successful for us in back of the house,” he said.
Meanwhile, not surprisingly many hotels have struggled with profitability in the wake of reduced demand, which has shifted the focus of owners to the costs associated with many of the brand-mandated amenities.
Biran Patel, partner, BHP Investments Company and AAHOA Chairman 2020-2021, detailed some of those conversations.
“When the pandemic started we thought that we could’ve have taken an aggressive approach in a lot of things that the brands have done from 2010-19 with increased fees and different mandates when we were somewhat recession proof. So we had dialogues with each brand and their executives to try and get as much as relief as we could for hoteliers. Some did more than others,” he said, noting that breakfast and housekeeping, for example, are still back in a limited capacity.
Patel continued, “In a competitive industry we have spoiled the consumer by offering so much. To stay competitive if the hotel across street is giving away these amenities I have to also. We’re having to go above and beyond even though it’s costing us more to stay afloat.”
Patel further pointed out that one major brand company previously offered as many as 80 to 90 different breakfast items, although that number was reduced following the pandemic to roughly 30 items. “It’s a modified version for the time being, but I don’t think we should go back to what it was before,” he said.
Nimisha Patel maintained that with breakfast there’s a “fine line” when it comes to balancing consumer expectations and simplifying the offering, while acknowledging the pandemic has offered something of a reset on amenities in general.
“It’s a great opportunity to adjust those things and for brands to really recognize what we need as owners and what the guest wants and to find a balance where it’s profitable for all of us. Our hopes are that when we have these discussions—through AAHOA and other organizations—that some of these brands really recognize that it’s not just putting everything out there, but what we do put out there needs to make sense for our bottom line,” he said.
Panchal noted that many of these costs are “much more than they have been historically” primarily as a result of supply chain issues, while suggesting the industry consider alternative pricing options when it comes to breakfast.
“I think we should adopt a model like the airlines have done. You get a can of soda or water complimentary, but if you want to get something to eat you have to pay for it. I feel like that model will work out. It’s going to take some time to educate the consumer, but I think we have spoiled the consumers with all the brand offerings. If one brand will come up with something we can make it happen,” he said.
Another issue impacting profitability for owners is the cost of having rooms booked through OTAs [online travel agencies]. Biran Patel noted that has been one of the focal points of AAHOA’s recent advocacy efforts, particularly regarding what it terms a ‘duopoly’ between Expedia and Booking.com. “We’re trying to figure out how to minimize costs and the fees that they’re charging,” he said.
Vaidya reinforced the point.
“The duopoly has become problematic for most hotel owners and it’s our fault for giving them so much power. We’ve basically given them our buildings without ever investing a penny into them. They’re a technology company and we’ve given them our entire inventory so they control us rather than the other way around,” he said.
Vaidya elaborated on some of the association’s other priorities on Capitol Hill, citing in particular its efforts to preserve the 1031 Exchange program.
“It seems like it’s always up for cutting. We’re always advocating to extend that, most of us here have utilized it. It’s something that this industry has used to grow our business and increase employment so that’s something that’s very important to us,” he said.
Vaidya also noted the association has been lobbying against the movement for increased financial reporting, as well as trying to eliminate the potential for frivolous ADA lawsuits.
Finally, Nimisha Patel—who served as female director on the AAHOA board of directors for more than three years—offered an update on diversity, specifically as it relates to women in lodging.
“One of my main responsibilities was really advocating and encouraging women to get into leadership positions and exposing them to things in the industry that they’re already doing, but sort of giving them the confidence and opportunity to be able to do more. I’ve seen over the last few years that there has been definitely more engagement and there are a lot of women coming out so that’s really wonderful to see, but there are still challenges,” she said.
Patel went on to add, “companies have to find the ability to be able to be flexible and give us as women an opportunity to fill those spots and do it in our own way, so to speak,” she said.