The lack of a rebound in non-rooms revenue has somewhat limited the restaffing of U.S. hotels.
The overall hotel labor index has grown to 52% of pre-COVID levels, led by the return of rooms division associates, labor management data from Hotel Effectiveness shows.
Front desk and housekeeping staff are leading the way, but for the industry to return to employing more than 8.4 million people in the U.S., non-rooms business must recover. So far, this segment of business shows no signs of a rebound.
Good news continues for luxury and resort hotels, which increased staff size by 17.5% in the past week. This category has been the slowest to recover in part due to location (city center and convention markets) and size (travelers avoiding large, more populated hotels). Analysts are watching this segment carefully over the coming weeks as the peak North American leisure season ends and conference season begins.
Meanwhile, hotel operators are preparing their 2021 budgets and are finding it challenging to predict labor costs for the upcoming year. Historically, management companies have taken a “percent of revenue” approach to budgeting their largest operating expense. With the sharp drop in average daily rate combined with volatile occupancy, more managers are using a “bottom-up” method for payroll budgets. This method links operations drivers, such as occupancy and length of stay, to staffing models. Using a “labor standards” driven model is proven to be more reliable and may be critical to estimating future gross operating profits in an uncertain future.
The data and chart above represent a sample of more than 3,300 same-store hotels and excludes hotels which have been closed during the analyzed period.
Del Ross is Chief Revenue Officer for Hotel Effectiveness.
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