With 300,000 fewer employees now than just two years ago, the hospitality industry is facing serious staffing and labor challenges. Due to the high demand for hotel labor, your daily operations may be strained and your staffing expenses may increase.
But even though hotel labor costs are up, there are ways to automate your processes so you can operate at maximum occupancy without compromising your revenue.We’ve compiled six important hotel labor cost trends and detailed the ways you can control labor costs to protect your bottom line without sacrificing the hotel guest experience.
Are you hit by the staffing shortages occurring throughout US hospitality? Mitigate rising labor costs by being less dependent on staff. See how Operto’s automated management solutions can change your business.
Trends in hotel labor costs in the U.S.
The Hotel Effectiveness Labor Cost Index report highlights key hotel labor cost trends in 2022:
1. Wages across hotel roles increased 7.6% YOY
As of March 2022, the average hourly rate of a hotel employee is $16.51/hour. This represents a 7.6% increase from the previous year, and this upward trend highlights the increasing labor expenses that hotels are facing.
2. Room attendant’s wage is up 11.3% YOY to $14.36/hour
When specifically referring to room attendant’s wages, hourly pay increased 11.3% between 2021 and 2022. Room attendants are one of the primary hotel expenses that you should take into consideration when calculating your operating costs.
3. Room attendant turnover is over 103% annually
With hotel room attendant turnover exceeding pre-pandemic levels, it is estimated that the average room attendant turns over at least once per year. The instability caused by these labor shortages can have a significant impact on your hotel operations.
4. Hours of labor per room up from 1.3 to 1.6
There has been a 23% increase in hours of labor spent per room cleaning at U.S. hotels between March 2021 and March 2022. This means the need for more labor, which inevitably has an impact on payroll-related expenses.
5. Guest stayover cleanings are up 50%
When comparing rates from early 2021, requests for stayover room cleanings are up 50%. If occupancy levels are high and labor supply is low, this demand for extra cleaning can cause disruption to your normal hotel operations.
6. Cost of labor per room increased by 26.6%As a whole, the total labor cost per occupied room increased by over 26% between 2021 and 2022. This significant increase in operating expenses needs to be taken into account when protecting your bottom line.
What this means for hotel revenue and operations
With the rising costs of labor, it’s reasonable to expect hotel profits to fall. While the 2022 U.S. Real Estate Outlook Report predicts a rise in revenue from international travelers, there are still areas of the market that will remain behind pre-pandemic levels.
The American Hotel and Lodging Association’s 2022 State of the Hotel Industry Report states that the hotel industry will be “volatile” in the coming years:
“All indications are that the hotel industry will continue moving toward recovery in 2022, but that full recovery is still several years away.”
This is in part due to the fact that work travel is not expected to meet 2019 levels this year, since projections show that “only a little over half of meetings and events will return in 2022”.
So while the hotel industry is slowly but surely making its comeback, the rise in hotel labor costs will have an impact on hotels that don’t learn to adapt their methods properly in the meantime.
How to reduce hotel labor costs
While the outlook on hotel labor costs, staff shortages, and unpredictability in the hotel industry is unsettling, there are ways to reduce your operating expenses—by automating your processes and reducing your dependency on staff.
At the same time, you’ll improve your guests’ experience by offering streamlined communication, smoother check-in and check-out, and the curated services that your guests expect.
Guest-facing app to minimize questions
Create a guest-facing app so you can answer your guests’ questions before they even have to ask them. Plus, by designing curated guides with information about the local area, you can cut back on concierge staff.
The Guides feature of Operto Guest allows you to give your visitors information about their room, your hotel, the surrounding area, and local activities, all in a convenient mobile-optimized web app. This helps you significantly decrease the number of guest questions and calls you receive, so you can focus your resources on where they’re most needed.
In-app guest messaging
With in-app guest messaging, you can alleviate the pressure on employees by giving them the ability to respond from wherever they are. No need to staff a front desk or reception area—your team can respond to guests’ inquiries even if they’re tending to another unrelated task.
When you automate key processes like guest verification and check-in, you can redirect labor and resources to the areas that need it most. This is an efficient revenue management technique for dealing with rising hotel labor costs.
Digital ID verification
Include digital ID verification, which is a feature of Operto Guest, as part of an automated check-in process. That way, it’s not necessary that your guests meet face to face with one of your staff members, saving both employees and customers time.
Self check-in and reimagining the front desk
There’s no longer a need for a front desk or anyone to staff it. Use Operto Guest to facilitate flexible self check-in and check-out, giving your guests convenience and autonomy over their stay. And with Operto’s advanced technology, you still have 100% visibility over what’s going on in all your rooms, even when guests have contactless entry.
Use hotel management software for more efficient processes
When you use the right hotel management technology and housekeeping software, you can save time and money while keeping employees and guests satisfied. With Operto Teams, cut down on operating costs and increase efficiency thanks to automated scheduling.
Plus, Operto’s Master Calendar and Dashboard give you a bird’s-eye view of what’s happening (and what needs to happen) in every corner of your hotel. Streamlined processes not only means fewer errors, but also happier employees and lower staff turnover.
Mitigate rising hotel labor costs with automated solutions
The success of the hotel guest journey hinges on you being fully equipped to meet your customers' needs. But that doesn’t have to mean losing profits to rising hotel labor costs. While current trends may sound some alarms, you can mitigate rising costs by automating key processes.
With Operto’s software solutions for guests and staff, you can control labor costs and keep your operating expenses lower while ensuring your hotel gives guests everything they expect.
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