Soundbites with youtip: Are hotels headed for a crisis?
Are hotels on the verge of a crisis?
Watching hotels raise hourly wages to recruit and retain service workers, I wondered what the financial implications would be.
Yes, RevPAR is up, and ADR is up, but is travel’s comeback covering costs today? And, if so, can the new operating costs be sustained?
I looked to Del Ross, CRO of Hotel Effectiveness, to break it down for us, and serendipitously, we spoke on the day he presented his hotel labor findings at the latest AHLA ‘On the Road’ series in San Francisco.
Del breaks down one of the slides he was to present, explaining how disproportionate the current labor hours used to run a hotel are compared to the costs.
Currently, hotel labor is operating well below pre-pandemic levels because not all the jobs have returned. We still missing F&B jobs, don’t have all the banquet and catering, and most housekeeping models are not back to normal.
Labor requirements measured in HPOR or Hours Per Occupied Room are still far below where they were pre-pandemic; however, Labor Costs CPOR or Cost Per Occupied Room have primarily surpassed 2019 levels.
HPOR levels versus CPOR pre-pandemic:
-Full Service = 85% to 101%
-Select Service = 88% to 105%
-Extended Stay = 76% to 91%
The bottom line is that when operating labor reaches pre-pandemic levels; costs will be incredibly high, 20%-30% higher, to serve the same guests that we had in 2019, which is more than offsetting the revenue gains currently seen.
What does this have to do with digital tipping?
Implementing digital tipping will raise the hourly wage of your service workers, improving recruiting and retention and offsetting the rising cost of operations.
#hospitalitytechnology #hoteltechnology #digitaltipping #hoteloperations