By Adam and Larry Mogelonsky
HITEC in June 2023 came and went with lots of incredible outings from vendors. While AI was perhaps foremost on the mind, what really stood out for us was the ability for integrated platforms to offer actionable insights to guide incremental profitability for hotels.
Speaking from experience, the two of us have worked extensively on helping hotels increase their net operating incomes (NOI), which then has positive second-order effects elsewhere, including the flexibility to innovate in other areas or even to seek more favorable terms from the bank. Driving NOI as well as topline revenues is the name of the game, and it all starts by getting different operations to work in harmony so as to curtail opex and administrative expenses.
Yet once you streamline the on-premise systems to smooth out the intricacies of modern hotel operations, where do you go from there? Fortunately, a new type of data integration between labor management and business intelligence (BI) software that we demoed at HITEC highlights what this next step should be by providing more actionable insights and predictive power to a series of increasingly complex tradeoffs at the corporate level.
Growing TRevPAR Without Hemorrhaging Labor Costs
Right now, 2023 has its headaches. Inflation is eating away at net operating income which can curtail funds devoted to future product improvements. Then there’s the collective challenge of recruitment, shortages and high turnover rates, all of which compound to make labor a limiting resource when thinking of new services or developing experiential offerings to differentiate the brand.
It follows from these converging factors that smarter labor management should be top of mind for every hotel executive and owner as the principal engine for continual business growth. And for that, ‘smarter’ means the adept use of platforms and systems to monitor, forecast, compare and nimbly reallocate labor in both a cost-efficient and a profit-effective manner.
The goal of maximizing profits is, however, often at odds with having a scrupulous eye towards cost savings. In years past, siloed systems showed you enough to optimize for one of these objectives while likely sacrificing the other. Now, there’s also a need to grow every profit center as reflected in the total revenue per available room (TRevPAR) metric in that it’s all about how much a guest uses at a property.
But how can you build other revenue streams when the core business – the guestrooms then F&B, meetings and so on – are a constant challenge to operate? A holistic approach, as granted by feeding WFM data into BI is what executives need to optimize for both cost efficiency and profit effectiveness.
To that end, in the week after HITEC we interviewed Steven Moore and Adam Glickman, respectively the CEO and VP of Brand Strategy at Actabl, to discuss how the company is meeting this present-day need for smart labor management while still growing TRevPAR. Actabl recently completed a full integration between Hotel Effectiveness – the company’s labor management platform – and ProfitSword – its enterprise BI platform – ostensibly an industry first in terms of the nature of this interface.
Cost-Effectiveness Not Necessarily Cost-Efficiency
Through our chats with executives over the years as well as through our asset management assignments, one pervasive hospitality lesson we’ve gleaned is: sometimes operators have to spend a little bit more to get a whole lot back. And yet in today’s economic climate, every dollar counts and it’s difficult to justify extra expenses on faith alone.
Glickman showed us one potential way that tech can solve this conundrum wherein ProfitSword analyzed stayover and checkout room cleaning metrics fed in from Hotel Effectiveness that was quantifying costs across an entire portfolio. To be strictly cost-efficient, you would think that foregoing stayover cleans is the way to go in 2023. And yet, throttling this service strains checkout cleans, as measured in hours per occupied room (HPOR), to the point where housekeepers can’t turn around every guestroom in time for resale, thus lessening the hotel’s profit effectiveness.
“To stayover clean or not to stayover clean?” With this latest labor-management-to-BI integration, hoteliers can now circle back to an in vogue question like this with highly precise data, letting each executive team fact-check its convictions.
Predictive Power for Operational Efficacy and Financial Growth
Beyond this use case, this new integration further eliminates the inefficient monotony of manual entry or error creation in financial reporting. What impressed us to the point of writing this article, though, was how such data can allow hotel companies to be more predictive with their forecasting – that is, incorporating complex calculations under the hood to make sense of the cacophony of data.
It’s this predictive power that enables a hotel company’s limited supply of labor to actually have bandwidth to activate new services, especially for groups that are trying to roll out new SOPs brand-wide but must first look at property comparisons to standardize key variables like scheduled labor, actualized labor, time clock data, overtime pay and outsourced contract team usage.
“When you automatically merge labor data in real-time with corporate-level financial reporting, comparing budget versus actual becomes far more accurate,” commented Moore on this point. “And it’s this predictive quality that raises the confidence for many other operational improvements while also opening the doors to new capex or external investments.”
The Importance of EX in 2023
Let’s not forget the managers and supervisors who are using all these various platforms. That is to say if you want good teams that stay with you for the long term – and avoid churn which is a huge cost in its own right – you have to factor in the ways that admin-level teams interact with technology as part of the employee experience (EX).
On this front, you may have read some of our previous articles calling for more consolidated systems, not just for richer data sets but so that employees can focus their attention and don’t get overwhelmed by having so many applications open all at once.
When you start to consider EX as an important objective, then a subgoal would be to reduce the total number of platforms a hotelier must log in to on any given day in order to reduce their job site stress. The statistic that best illustrates this issue comes from a study published in 2019 by the University of California, Irvine, which found that the average office worker switches between different screens or tasks 566 times per day – the more switching, the more short-term memory lapses and more inefficiencies.
Here are three modern features we’ve identified as important for you to consider:
1. Single sign-on (SSO) to reduce time spent logging in and switching screens
2. Enabling more fluid team communications and ability to seamlessly shift swap
3. Flagging actionable insights across all consolidated platforms so that onsite managers know where to focus their efforts and for corporate-level managers to know where the gaps are
The Bottom Line
While the two of us have introduced a lot of acronyms here, this alone should tell you about how complex the world of hotels have become. It doesn’t have to be that way if you have tools that can help to streamline the data into a digestible format.
In order for owners and executives to think ‘big picture’ about goals like growing TRevPAR and boosting NOI, they must first have a clear path to optimizing the core services at a hotel, especially when it comes to smarter labor optimization. And nowadays, that can only happen at the corporate level as enhanced by BI with an ever-expanding consortium of integrations to allow executives to easily digest lots of data to more accurately answer big questions.
Hoteliers must now think beyond pure cost efficiencies and look at bigger goals like reducing turnover via better software EX or how new services will enrich the guest experience. Only then will a hotel organization realize tremendous business growth and using the latest software tools is a great next step.