By Dan Ives
Less than a month remains before major new cost-control challenges confront hotel housekeeping operations across the United States, the result of new overtime pay regulations covering every employee who earns less than $47,476 per year.
Understandably, many hotel general managers across the country still appear to be in a state of shock about how to adapt to the new regulation, which goes into effect on December 1. In an industry where many workers and middle managers typically put in more than 40 hours per week but earn less than the new overtime pay threshold, the bottom-line impact could be profound.
In a recent report by the Indiana Business Journal (IBJ), several hotel operators estimated the new overtime regulation could cost them over $100,000 per year — and one said it could add $300,000 to the company's annual payroll. Six hotel general managers contacted for the IBJ article said they are "still formulating their plans for how to deal with the new law.
"We're still trying to understand how to approach this," said Phil Ray, general manager of the JW Marriott, a 1,005-room hotel, who was quoted in the article.
Several other hotel operators contacted for the IBJ report said they are hoping federal lawmakers will provide them a reprieve somehow, either by altering the new regulations or delaying them.
But as the old expression goes, hope is not a plan.
A Systemic Threat to Career Paths
For an industry typically operating on very thin margins, the new overtime laws could mean one or a combination of unwelcome outcomes for hotel housekeeping managers and workers, including the loss of jobs, benefits, or profit-sharing – or the absence of viable career paths altogether.
Some hotels may choose to switch their middle managers to hourly status, which would likely harm employee morale. It could mean longer, much more arduous and discouraging paths to reach the ranks of middle management.
Hotels may feel forced to hire independent contractors, vendors, or part-time employees to reduce their overtime pay exposure as a result of the new regulation, Michael Blickman, a partner in the employment law group at Ice Miller who has been advising clients in the hospitality industry, told IBJ.
In the long run, hotels could suffer from a chronic inability to attract and retain valuable employees who are the ones that ultimately provide a satisfactory guest experience – which is the heart and soul of any successful hospitality business.
Solutions to the New OT Pay Regime
Bemoaning the new regulations won't help hotels prepare for the inevitable. The industry must learn to adapt to the new reality, using all the tools legally available to comply with new overtime pay rules in order to sustain the most humane and satisfying working conditions for their employees.
Housekeeping represents the single largest labor cost for hotels and is therefore the department where improvements in operational efficiency can offset the new law's bottom-line effects more than any other. It's also the area where the adoption of innovative workflow management solutions can yield the greatest employee productivity gains, while improving quality of service in the process.
The hospitality industry is traditionally slower than others to embrace innovative technologies. Sometimes it takes an unwelcome shock to the system, such as the impending overtime pay regulations, to overcome their technology jitters about adopting new innovations.
It's time for hotel owners and managers to realize that proven solutions are already within their reach, because December 1 will be here a lot sooner than they think.