News for the Hospitality Executive
Staffing For Prosperity
By Robert Mandelbaum
August 20, 2012
In 2010 it was the ability of U.S. hotel managers to control labor costs that was the driving force behind the subdued 3.4 percent increase in total operating expenses posted by the properties in our Trends® in the Hotel Industry survey sample. Despite a 6.2 percent gain in occupied rooms in 2010, operators were able to service the increased volume of business with just a 1.5 percent rise in the total hours worked by hotel employees. Following the dramatic declines in revenues and profits suffered during 2009, it was no surprise that hotels were leery to “staff up” despite the sharp rise in lodging demand.
As the U.S. lodging industry continues along the road to recovery and occupancy levels begin to surpass long-run average levels, hotel managers will be challenged to continue to operate on austere levels of staffing. If 2011 was any indication, it appears that operators may have already reached the point when additional employee hours are needed to provide the amenities and services typically offered when hotels are more prosperous.
To gain a better understanding of movements in hotel staffing levels, we analyzed the change in the total number of employee hours worked at the average property in our Trends® survey. The following data was gathered to calculate historical changes in hours worked:
According to the BLS, the average weekly hours worked by an individual Leisure and Hospitality employee has not changed significantly over the years, thus facilitating the preceding calculation. Exhibit One presents the pertinent labor cost and compensation date for the years 2002 through 2011, as well as the resulting calculation of hours worked.
To provide some context to the historical changes in staffing, we analyzed the historical relationship between the annual changes in total hours worked by all employees and the annual changes in the number of occupied rooms. When the change in hours worked exceeds the change in rooms occupied, this would be an indication of a decline in productivity. Conversely, when the change in occupied rooms exceeds the change in hours worked, it would indicate an increase in productivity.
Based on the June 2012 edition of PKF-HR’s Hotel Horizons® report, PKF-HR forecasts continual growth in occupancy and ADR levels for U.S. hotels through 2015. This will result in a period of revenue and profit growth well above long-run averages. If history repeats itself, we can expect hotels to react to the prosperous market conditions by scheduling more hours for their existing staff, and hiring additional employees as needed.
Increased levels of staffing will most likely result in declines in productivity, but the impact on profitability should be minimal. The expected continuation of high levels of unemployment should help to suppresses future increases in employee compensation, thus limiting the growth in total labor cost expenditures.
Robert Mandelbaum is Director of Research Information Services for PKF Hospitality Research, LLC. He is located in the firm’s Atlanta office. To purchase a copy of the 2012 Trends® in the Hotel Industry report, please visit www.pkfc.com/store. This article was published in the July 2012 issue of Lodging.
To Learn More About
News Being Published on Hotel-Online Inquire Here
Come the Profits! / Robert Mandelbaum / July 2012
Cost Of Guest Loyalty / Robert Mandelbaum /June 2012
And Taking of Credit at U.S. Hotels / Robert Mandelbaum and Alvin
Minsk /April 2012
Meetings Market Recovery Continue In 2012? / Robert Mandelbaum /
Managers Labor To Control Labor / Robert Mandelbaum / January 2012
Was A Budget Beater For U.S. Hotels; Looking Forward - 2012 Should
Result in a 15.2% Rise in Profits for the Average U.S. Hotel /
Robert Mandelbaum / October 2011
Hotel Utility Costs Under Control Adding to the Bottom Line /
Robert Mandelbaum / September 2011
Begets Profits / Robert Mandelbaum / August 2011
Night Stands Are Expensive / Robert Mandelbaum / July 2011
Food and Beverage: Locals Up, Lounges Down / Robert Mandelbaum /
Hotels Give Some Things for Nothing / Robert Mandelbaum / April 2011
Up The Phone And Hold The Starch, But Please Park The Car / Robert
Mandelbaum /February 2011
Planners Optimism Rising / Robert Mandelbaum / January 2011
Profitable Will Your RevPAR Be In 2011? / Robert Mandelbaum /
Show – No Problem; Hotels Profit from Attrition and Cancellation Income
/ Robert Mandelbaum / November 2010
Direction - Wrong Amount: Hotel Managers Underestimated 2009 Declines
in Performance / Robert Mandelbaum / October 2010
|Surprised, or Stubborn? U.S. Hotel Managers Missed Their Budgets In 2008 / Robert Mandelbaum / October 2009|