Money spent smarter is money well spent
When RevPar growth either stays flat or slows down, particularly where demand varies with significant value during the non-peak season or when there is volatility in the marketplace, the challenges posed to hoteliers, trigger a shift of the profitability levers that includes increasing revenue, reducing costs and improving productivity.
Some hotels constrained by market conditions, choose to reduce rates, hoping that it would create demand. This strategy may result in selling more rooms, but it will hurt the bottom-line and devalue the hotel’s image. Others pursue cost cutting – with labour as the immediate line item on the firing range and the easiest option. Only a very few consider the most sustainable, controllable and surest lever to improve margins, i.e. advance productivity by unlocking more value from their existing labor investment.
In the fast-paced and ever-evolving world of hospitality, teams are asked to do more with less. Employees are tasked with covering multiple roles and leaders are busy stretching budgets while praying for service excellence. The pressure to "do more with less" has become a universal mantra. But how much more can hotel teams handle? And more importantly, are executives taking a hard look at how much they should be doing to improve productivity?
Deciding where to cut corners for the sake of saving costs can lead to sacrificing guest experience, especially when the talent shortage is part of the cost structure. It's a matter of the expectations of guests. It's a matter of what is the brand’s standard of operation. Reducing service or cutting tasks, each one of which has a cost is indeed a tricky business model. That’s why the conversation is shifting from “spend less” to “spend smarter” - investing in tools, processes and talent strategies that get more value from every rupee spent on the cost of labour.
Barry Sternlicht, founder, chairman and CEO of Starwood Capital Group, said that “Taking costs out is for monkeys; driving revenue is the hard part.” In his estimation, return on investment means thinking about each operating department; rooms to F&B - working productively and maximizing returns in each.
Recruiting is the most underestimated challenge, and success from mastering sourcing, process, and closing. Many are ignorant of the fact that turnover is an invisible tax on profitability. Recruiting, onboarding and training a new associate can cost a lot before that person is fully productive. And the higher up the chain scale, the more those costs.
Top-performing properties aren’t simply running leaner—they’re better at aligning staffing to demand, cross-training associates and using technology to eliminate low-value work. Retention isn’t just about pay. Associates stay where the tools are modern, the workload is reasonable and leadership invests in their success.
Just as much as technology enhances guest appeal, start by making the associate experience as frictionless as the guest experience. A hotel that relies on an old legacy PMS, requiring front desk staff to click a dozen times to complete a task, instead of two or three clicks - adds friction to an already demanding customer care role as well as a frustrating wait to a tired traveler.
Shafeek Wahab – Editor, Hospitality Sri Lanka, Consultant, Trainer, Motivational Speaker, Mystery Guest Auditor, Ex-Hotelier
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