To most hoteliers, the term revenue management brings to mind a set of complex tools and analytics used to optimize room rates. And rightly so, there is a lot that goes into maximizing income from available inventory to make a positive impact on the bottom line and overall business growth.
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In reality, that specific discipline is just one aspect of revenue management success. Just as essential to hotel profitability is proper management of operational costs. Posting record income means little when out-of-control expenses and labor costs that tank NOI.
For hotels and resorts alike, labor continues to be the largest single operating expense that, when improperly managed, diminishes the success rate of any revenue management strategy. From costs associated with frequent employee churn to overstaffing departments, inefficiencies in labor management can create a continuous drain on a property’s finances. The good news is that, by simply streamlining their labor and task management processes, hotel businesses can begin to hang onto much more of their hard-fought-for profits.
Across the hospitality sector, more and more properties are recognizing this crucial link between operations and effective revenue management. They are also leaning on technology and other labor management approaches that can slash costs, while still guaranteeing exceptional service for every guest. For hoteliers, there has never been a more critical time to reassess how they manage their most important asset-human capital. Doing so isn’t just a way of dealing with the challenges brought on by the recent labor crisis. It’s also an essential element of running a competitive business that continuously delivers on its revenue management goals.
How Effective Labor Planning Comes into Play
High staff turnover is nothing new to our industry. The transient nature of hospitality is an inherent issue that costs a typical hotel $5,864 per employee according to Cornell University. The continuous training and uniform expenses that come along with skyrocketing turnover rates make operational budgets a challenge to get under control.
Smart hoteliers are identifying and addressing the reasons behind churn to make operational changes to increase retention. One issue that has emerged post-pandemic is the widespread expectation of flexible work schedules – something that the hotel industry has yet to largely embrace. Like anyone else, hotel staff have significant responsibilities outside of work. Whether it’s childcare, pursuing an education or trying to hold down a second job, employees are trying to make their lives work in today’s world. Unfortunately, continued resignations keep hotels in an understaffed situation where adding flexibility seems impossible. Hoteliers are rethinking their entire labor planning process and finding a lot of success by adopting a flexible schedule strategy.
The post Making Workforce and Cost Reduction Part of Revenue Management Mix appeared first on Revenue Hub.