Labor challenges and how to make better use of technology to create efficiencies were top of mind with panelists participating in HOTELS Opportunities Conference on March 31 at the Mandarin Oriental, Miami.
The first panel session of the day-long event, entitled “During Covid – How to Pivot and Reinvent Operations,” was led by Life House Hotels Founder and CEO Rami Zeidan, who wasted no time asking the four other panelists to identify the operational issues they have been facing during the past year and talk about the solutions they are employing to overcome problems.
Sloan Dean, CEO and president of Remington Hotels, was quick to suggest that unemployment stimulus in U.S., now extended through September, is making it even harder to find staff as his hotels reopen and welcome back guests. “Even the staffing companies are having challenges,” he said, adding that Remington still has some 200 line workers on furlough and many of them do not want to come back at this time. He added that other important associates such as revenue managers have left the industry altogether, having found similar opportunities in other businesses.
To combat labor shortages, Dean said Remington is conducting more regional hiring programs.
Raul Leal, former CEO of Virgin Hotels and now with the Virgin Group board, warned customers will not be forgiving to any hotels who are short staffed. “You can’t support revenue and rate growth under these circumstances,” he said, adding that F&B will have a big impact on revenue as people, especially locals, want to come back. “Operators must reinvent on the F&B, entertainment and event sides to bring locals back, which will be the bread and butter of the future.”
Jason Liebman, managing partner of owner-operator Auric Road, with five boutique properties had better news, saying his properties in locations like Big Sky, Montana, Palm Springs, California and Daytona Beach, Florida, have been recording record numbers since reopening. “We slung shot back with record rates and occupancy,” he said. However, he too, is having issues with labor and said while recently trying to find 20 line cooks, the group could only find 10. Auric Road has also had trouble finding housekeepers and has had to cut back on turndown service.
Highgate Managing Director Richard Millard said his company has been involved in some US$4 billion in hotel acquisitions over the past six months as it is bullish on a comeback that will not see a dramatic paradigm shift in guest habits as many suggest. “But we have to be more careful about how we do what we do, and operate from different business model, especially for larger hotels,” Millard said. “We can’t afford big administrative teams in hotels and technology will play a larger role.”
Millard agreed with his fellow panelists that is hard to find line employees in many markets and how hotels now have to compete with other industries for the same people. “We will have to do things for those people we haven’t done before – and it is more than payroll,” he added.
Dean said Remington won’t go back to how it operated before the pandemic, citing, for example, how it has redeployed business transient sales managers.
Remington is also placing grab-and-go F&B stations next to front desks, instituting more mobile F&B order and pay systems, and even offering mixed cocktails with Dean & Deluca-style deliver, according to Dean. “We are reinventing F&B to be more like this and have the lobby bar as a supplement with skinny menu,” Dean said, adding that F&B contribution has tripled per occupied room, admittedly partially because restaurants are not open.
Remington is also moving to mobile key check-in at its hotels and marketing contactless service. Dean said resorts are selling out on weekends, yet Remington is staffing with fewer people at the front desk because of mobile check-in. “We will get back to normal occupancies, but never normal employment levels,” he added. “When we had 100 associates, we now will have maybe 80.”
Dean also talked about how it has cut the number of shuttle buses it uses from 60 to 20 as a result of a new, lower-cost partnership with Lyft. “We must reinvent the business to be NOI break even at lower occupancy levels,” he added. “We have lowered our break even by 1,000 basis points – that is what’s going to make the business stronger long term. It’s not about going back to the same way of doing business… There are assumptions that show profitability not coming back to 2019 levels until 2024, but that under-assumes some of the technology uses and efficiencies that we have learned over the past 12 months.”
Zeidan pointed to the transient leisure business booking windows tightening up. “So, dynamic pricing models are important, as is being ok with empty hotels until three days before arrival dates. We are also seeing lower cost per click on metasearch channels. So, as we find lower CPCs we can still bid to high ROI on metasearch channels and still get 70% direct bookings across our portfolio.”
Life House, which has been a tech-enabled concept from its inception, has automated tasks in accounting, finance, revenue management and pricing, according to Zeidan. “A lot of hotel groups are now focusing on doing same,” he said. “Anything that doesn’t add value to guest experience can be automated. It’s been working.”
Dean added that hotel operators must further automate the back-of-the-house. “Is housekeeping a daily occurrence?” he pondered. “It will be interesting to see if large chains keep it at third day on stayovers. That is now standard in the franchise community. It will be interesting to see if brands and operators go back to daily housekeeping – it’s still a question mark.”
Leal talked about how Virgin went through a cadre of SOPs and eliminated 15% of them that were no longer efficient. “Then augment them with technology and keep our people employed,” he added. “Any strategy to make hotels more profitable has to go hand-in-hand with process improvements.”
Dean also talked about how Remington monitors other successful businesses during the pandemic to consider new ways forward. He said he sits on the license board at Starbucks and that he has come to learn that 42% of their business is “mobile order and pay” in corporate stores and it’s growing toward 50%. “Why can’t we do the same?” he said. “Millennials drive everything off their personal device. This is an opportunity to reinvent the way we operate. We can drive business to contactless and mobile. We need to take opportunities in business and reinvent them.”
Zeidan added how Life House has invested in its own mobile app, as well as SMS messaging, which has had great adoption. “We partnered with Kayak to be our mobile app for consumers booking independent hotels and don’t want to download hotel’s app. There is a sprouting of technology to support independent hotels.”
Finally, Leal talked about how data wars have arrived. “Are we prepared?” he asked. “Airbnb has an incredible data machine and as a result have a competitive advantage. Brands are mostly siloed and control their own data, but their ability to manipulate data and understand guests is critical. Hoteliers must get the most out their data when being bombarded by third-party companies like Airbnb. Data should be on all of our minds and we should know that the strategy of big brands is to continue to accelerate their data learning curves.”