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EI-AH&MA / KPMG Study 
Finds Hotel Industry Turnover Rates Continue to Climb

ORLANDO, Fla., April 1998—Full-service deluxe and luxury hotels are not immune to the industry-wide problem of high employee turnover, according to the results of a benchmarking study conducted by the Educational Institute (EI), the American Hotel & Motel Association (AH&MA), and KPMG Peat Marwick.

“Turnover was much higher than we had anticipated,” stated Michele Bailey DiMartino, vice president and director of EI’s Center for Hospitality Research Solutions.  The study found annual employee turnover rates to be 158 percent for line-level employees, 136 percent for supervisors, and 129 percent for managers.
“In the past, a half-dozen different turnover calculations were being used by various companies,” DiMartino explained.  “For this study, we collected raw data and did the calculations ourselves so there would be consistency in what was reported. With these numbers, we can more accurately compare turnover rates--brand against brand, property against property.”

The survey of 229 full service hotels from ten hotel companies also looked at reasons for both voluntary and involuntary turnover, based on the perceptions of the respondents, which included general managers, human resource managers, training managers, and accounting managers.

The top reasons for involuntary turnover (i.e., employee termination) were excess absenteeism, poor job performance, frequent tardiness, frequent guest complaints, and other issues such as theft or job abandonment. The top reasons for voluntary turnover (i.e., the employee decided to leave on his or her own accord) were better pay elsewhere, better career advancement elsewhere, personal/family reasons, intracompany transfer/promotion, and preferred job outside the industry.

DiMartino noted that the most cited reason for voluntary turnover—better pay—might not accurately reflect why employees leave a job.

“While money may be a factor for some people, experience shows they often give that as an excuse rather than tell an employer about other factors that prompted them to seek a new job,” she said.

“I think it’s important that personal and family reasons ranked so high. It emphasizes how vital it is for employers to take into consideration what’s happening at home, and to realize that in order to keep valued employees, they must develop and support the whole person—not just the man or woman who shows up as the front desk clerk each day. Employers don’t like to hear this,” DiMartino observed, “and, granted, it is not an easy area of employee relations and development to affect. However, it is necessary in order to retain some of our better performers.”

Two of the turnover factors—career advancement and getting a job outside the industry—speak to the hospitality industry’s “image problem.”
“We need to do a better job convincing employees that the hospitality industry is a place where you can build a career,” said DiMartino.

The Full-Service, Deluxe and Luxury Benchmarking Study also examined the amount of time companies spend orienting and training employees at all levels.  Other questions, being focused on by KPMG, dealt with customer retention and revenue enhancement strategies, and key financial measures. More specifically, the most widely used marketing programs reported were airline GDS systems, which are currently being used by 86% of the respondents, and on-site computerized revenue yield management systems, which were also being used by 72% of all respondents. In terms of customer retention, the most widely used approach was manager acknowledgement of in-house repeat guests, utilized by 87% of hotels. Recognition of repeat guest’s special needs through tracking guest history was also commonly used by 86% of respondents, and a hotel company-wide frequent stay program is not far behind with a popularity of 82%.

“The results of this comprehensive study will help us identify best practices and establish baselines for future benchmarking study comparisons,” DiMartino explained.  “These figures essentially provide us a “snap shot” of the deluxe and luxury hotel industry.”

Companies that participated in the benchmarking study survey will receive reports comparing their responses to the sample aggregate. The Center for Hospitality Research Solutions and KPMG Peat Marwick will also develop aggregate and custom reports that will be made available, for a fee, to the public by calling the Center for Hospitality Research Solutions at the Educational Institute, 407-999-8196.

Reports from the study will be available by mid-summer.

Established in 1953 as a nonprofit educational foundation of AH&MA, the Educational Institute is the world’s largest hospitality communication resource center, providing quality training and educational materials for the hospitality industry.

Michele Bailey DiMartino, 
Vice President, Center for 
Hospitality Research Solutions
Also: Hospitality Industry training tools available from EI

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