A reduction of approximately 64,000 positions at a sample of more than 3,300 U.S. hotels highlights a risk as hotel companies prepare budgets.
REPORT FROM THE U.S.—After recovering more than 2.1 million jobs since April, the U.S. hotel industry experienced a retreat in total employment numbers over the past week, a reduction of approximately 64,000 actively filled positions, labor management data from Hotel Effectiveness shows.
The return to school marks the end of peak leisure season in North America, and with corporate travel recovery still tepid, occupancy growth has also taken a step back. Rooms division staffing levels are directly linked to occupancy levels, so the overall labor index is expected to recover over the Labor Day weekend and then drop once again after holiday travel subsides.
Unpredictable occupancy levels are making 2021 budgeting and forecasting more difficult than usual. With management companies’ fees tied closely to gross operating profits and overall revenue performance, budget season is a new source of stress in the industry, as reported by Hotel News Now earlier this week.
Trend-based budgeting models, usually incorporating year-over-year change assumptions, will not work in 2021. With average-daily-rate levels that are 30% below pre-COVID-19 rates, managers who used a “percent of revenue” method to predict labor spend are also searching for a better method.
“Hotels have no choice but to adopt a dynamic budgeting model for labor costs,” said Bruce Barishman, VP of operational excellence for Aimbridge Hospitality. “Hotel owners accept that revenue and occupancy forecasts will change a lot over the next six months, so we are using a budget model that adjusts variable labor costs automatically with each new forecast.”
The data and charts 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.
The assertions expressed in this article do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please feel free to comment or contact an editor with any questions or concerns.