Hospitality has always hinged on one simple promise: take care of the guest. As any hotel operator knows, however, it’s not always that simple.
Providing a quick and easy check-in experience, acquiescing to room preferences and catering to their every whim once guests are in the room has long been the industry standard. Or, at least, the industry standard goal.
But that standard is becoming harder and harder to hit thanks, in large part, to labor challenges.
“Labor remains the highest expense on the P&L (profits and loss statement), with key roles like housekeeping and front desk experiencing persistent turnover,” noted Raheel Moolji, director of investment sales at Greysteel, a middle-market focused real estate investment banking firm.
Staffing shortages remain widespread, with hotels across the country struggling to fill key frontline roles. In major markets, rising wages and evolving labor regulations are pushing payroll costs higher. Minimum wage in Washington, D.C., for example, is $17.50 an hour. It’s at or above $16.50 an hour in Washington State, New York and California—but labor costs are up nationwide.
The combined costs of hospitality worker salaries, wages and employee benefits increased by 4.8 per cent last year, according to CBRE’s latest hospitality intelligence investment report. At the same time, the firm notes that the number of hours employees logged at the average hotel was down 7.4 percent.
“Hotels are paying more for fewer hours worked, which is indicative of the struggle operators have had to fill open positions, as well as cuts in the services and amenities hotels offer to guests,” the report states.
Unfortunately, all of this is occurring at a very inopportune time for the service industry.
“While we continuously seek greater efficiency to protect NOI, guest expectations for service remain high, especially as rates continue to rise,” Moolji added.
With guest expectations higher than ever, cutting services and/or amenities isn’t a palatable strategy for many hotels. And it doesn’t have to be.
Tech as the New Team Member
Savvy operators are leaning on automation and other tech models to address rising costs, worker shortages and customer service.
“By integrating tech tools, hotels can maintain seamless service while prioritizing personalized guest experiences where they matter most,” Moolji said.
Mike Gray, global vice president of strategic partnerships at internet connectivity and network management solutions provider Nomadix, notes AI (artificial intelligence) can automate many back-of-house tasks, including reporting, revenue yield, occupancy forecasts and the like.
Then there’s the customer service pain points.
“Check-in remains the biggest bottleneck for hotels,” said Branigan Mulcahy, co-founder of Virdee, a straight-to-room guest-experience platform. “These tasks are repetitive and labour-intensive.”
Mulcahy’s research shows hotels spend an average of $9 to $10 per check-in on front desk labor alone.
“These tasks can now be obsolete due to the power of technology,” he continued. “Operators are urgently rethinking these touchpoints due to a combination of rising labour costs, staffing shortages and the fact that guests don’t have patience for lines.”
One of the most widely adopted responses to these challenges is mobile check-in, which is commonly paired with mobile keys.
“Mobile keys are among the most popular and well-known solutions because it mirrors consumer preferences for personal, smart device-enabled self-service,” said George Winker, vice president of sales for North America at Vingcard, an advanced technologies provider for the hospitality industry. “And it avoids the need to wait in line at the front desk.”
Automated service platforms like Virdee’s typically address the three main tasks associated with check-in: identity verification, payment submission and key issuance. Guests can complete their check-in process from the web, their mobile device or a lobby kiosk.
Mulcahy reports that hotels utilizing Virdee often report a 30 percent to 50 percent reduction in average check-in time. It has also resulted in a measurable boost in guest satisfaction scores of up to 23 per cent, particularly among business travelers and digital-native guests.
“One brand saw its app store rating increase by a full point after rolling out mobile check-in with us,” he added. “All of these results show that automating the guest journey isn't just a nice-to-have. It's a strategic lever for profitability.”
The Rio Hotel & Casino in Las Vegas achieves more than 50 percent check-in conversion with Virdee on its busiest days, while extended-stay brand LivAway Suites has been able to remove its nightshifts altogether.
“Virdee processes 100 percent of check-ins,” Mulcahy continued. “As a result, they’ve saved one to two heads per property. Nightshifts are also notoriously hard to staff reliably, so LivAway also benefits from reduced staff churn.”
Anneliese Vance-Sherman, chief labor economist for the Washington Employment Security Department, noted that schedule adjustments have become a common strategy among hotel employers facing rising wages in the state. Altering service offerings (providing room service or housekeeping by request, for example) and automating tasks have been as well.
“Rising wages have posed challenges to businesses,” she said. “Part of the motivation—especially in industries for which labour is one of the largest and most variable costs—is cost cutting through staffing reductions. Technological substitution makes this possible to a certain extent, but through the transformation of jobs by eliminating or changing tasks.”
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