Enhancing the Guest Experience Through Employee Retention

By Bernard Ellis President & Founder, Lodgital Insights LLC | May 31, 2015

While many industries are notorious for employee turnover, it is particularly painful for hospitality, where guest service is such a crucial part of the product. How painful? According to the Bureau of Labor Statistics (BLS), the hospitality and leisure industry had the second largest number of employees voluntarily quit their jobs in 2014, with more than 6,000 people choosing to leave their current position.

One might first conclude that the recovery of the industry brought many employees new opportunities to take better offers with a competitor. After all, "once hospitality is in your blood, you don't leave," as so many in the industry like to say. However, a few years earlier, the downturn offered different evidence, as the opening of new gaming establishments were welcomed in many hard-hit markets, providing jobs for large numbers of employees who were new to the industry. Despite the persistence of high unemployment rates in 2011, new gaming openings still experienced relatively high turnover. Even with such limited alternatives, many employees simply discovered that hospitality was not for them. This challenge will persist the industry, as not only must hoteliers fill vacant positions left behind by job hoppers, but they must also fill new positions, given that the BLS projects a 0.9 percent annual growth rate for the hospitality and leisure industry between 2012 and 2022. The industry as a whole must determine how to improve employee retention and become more skilled in identifying who will truly enjoy working in hospitality in the first place.

Identifying the Impact of Turnover

Replacing an employee is not simply about selecting a new hire. Turnover is both costly and time consuming for hoteliers' human resources (HR) departments. According to the Society for Human Resource Management (SHRM), direct costs to replace a member of the workforce can "reach as high as 50 to 60 percent of an employee's annual salary, with total costs associated with turnover ranging from 90 to 200 percent of annual salary." When considering the labor statistics cited previously, this can quickly add up to become a significant expenditure for hoteliers. If third-party recruiters or training are required each time a new position opens, this creates additional unforeseen expenses associated with onboarding a new employee. Constantly repeating the recruitment process also detracts from HR employees' ability to promote strategic business objectives, as they must dedicate a large amount of time to screening and selecting candidates.

However, the most important way that employee turnover negatively impacts the hospitality industry is through its effect on the guest. If a hotel property is understaffed, it can cause delays in services such as maintenance repairs or housekeeping rotations. Departments may overwork existing employees or struggle to complete critical tasks because there are not enough names on the payroll. If guests do not have their needs met in a timely manner, it will significantly detract from their brand loyalty and willingness to return in the future, and could potentially deter other guests with unfavorable reviews. Additionally, tenured employees typically provide better service because they are more familiar with processes, know who to contact when an issue arises, and often recognize frequent guests. In order to optimize the guest experience, hoteliers should look to create a workforce comprised of long-term, knowledgeable employees that express dedication to the organization's strategic business goals.

In today's increasingly competitive market, hoteliers must question what differentiates their customer experience from another. Many properties offer a variety of accommodations and entertainment options, so why would a guest choose one hotel brand from the next? When a single negative interaction could make the difference in a guest's brand loyalty, the importance of identifying the best and brightest job candidates becomes clear. Hoteliers across all sizes and locations share a common need to mitigate employee turnover by selecting job applicants that are most likely to be successful in a particular position.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.