The shift to managing labour as an investment rather than an expense – as is traditional – is a process that will dramatically improve profits. In his presentation, Del Ross, chief revenue officer at Hotel Effectiveness, spoke in detail about how to shift perspectives on a hotel’s biggest operational expense. The first step is to analyse the labour categories and establish metrics based on set standards. Next, break down the three categories of workers to base hours (positions to keep the doors open), flexible hours (staff engaged based on productivity rates) and extra hours (brought in to hit strategic objectives). Then, assign productivity targets for labour investments.
Measure the output of every staff member by both quality and quantity. For example: the housekeeping and laundry minutes per room (MPR), management per occupied room, and so on. For each metric, targets should be established based on internal goals and validated against external benchmarks. These targets are the basis of standards-based dynamic management, with the standards defining a hotel’s needs. First, identify the fixed positions (like GM or director of sales) and variable positions (such as front desk, housekeeping and banquet staff). Then, establish the key business drivers for scheduling variable positions. This includes rooms sold, covers or average time for stayover cleaning. With these standards and metrics established, automate them in a tracking application to monitor labour performance. This dynamic data offers the capability for management to conduct daily, weekly and monthly forecasts, and respond accordingly to adjust labour plans and schedules.
This regular analysis results in actionable insights, value-added oversight and profitability enhancement. These figures in hand are the basis for meaningful conversations among management, owners, department heads and staff – “Why are stayover MPR three minutes above standard? How can we fix this?” or “Congratulations on reducing minutes per arrival by 30 seconds. Can you share how you did this?”
The benefits to this improved approach will begin to show themselves. Managers have data to defend their labour budget. They can also focus scrutiny on productivity expectations. Plus, with a flexible budget, reforecasting takes minimal effort, and all of this frees up time to work on revenue generation ideas. Hotel owners can have productive discussions with their team, and a realistic illustration of the business profits and how labour impacts them.
Another way to boost labour efficiency is to monitor these metrics to eliminate junk overtime: early and late time clock punches and skipped or shortened breaks. Junk overtime is often missed, but is worth catching because it can cost some hotels more than $100,000 a year.
By treating the labour force as an investment, hotels will have the information needed to hold managers accountable for productivity and standards compliance, and use benchmarks to ‘raise the bar’.
Hotel technology and enhanced accounting processes
For nearly 50 years, HITEC has been shining a spotlight on hospitality technology – and the seemingly limitless possibilities of how technology can be used to reimagine doing business in the hospitality industry.
Cyber HITEC presenters Mark Haley and Steve D’Erasmo shared the ways in which various hotel processes have been reimagined in 2020, and how technology has everything to do with it. This covered everything from valet parking, check-in, guest messaging and the elevator ride up to the way guests order room service.
Meanwhile, if a hotel’s processes are not tight, it may be bleeding money. And who can afford that in 2020? It is impossible to skip the inspection process and expect that everything will fall into place. Advisory company PKF O’Connor Davies presented on accounting processes and procedures at Cyber HITEC this year, and some of the best practices outlined in its session include reconciliation to subledgers; procedures in place for sales tax collection and payments; reconciling bank accounts within the system; reconciling cash and credit cards daily; and reviewing balance sheet reconciliations.
$100,000
The amount of junk overtime can cost some hotels each year.
Hotel Effectiveness
Understanding the ambiguity of ethics
Dr Judy Holcomb’s HITEC presentation explored frameworks for evaluating ethical decisions through various scenarios. In a globalised, interconnected world, the benefits of technology are well documented. Nevertheless, despite pure intent in most cases, it can also be used for illegal or harmful activity. As such, hospitality professionals and others must regularly discern the best ways to leverage it.
In particular, emerging technologies create opportunities to re-evaluate ethical questions, or pose entirely new debates. In many cases, these ethical scenarios are marked by ambiguity. Depending on the lens used to evaluate the situation, one might come to a different conclusion on what the most ethical action should be. For example, AI is a valuable tool. It can be leveraged for safety and security. However, in certain scenarios, the original intent to protect might be clouded by privacy infringement.
Holcomb’s research found that the best avenue to deal with ethical situations involves three steps. First, avoid overconfidence. Do not overlook potential threats to good intent. Second, consciously avoid incrementalism. Often, major ethical wrongdoings begin with minor ethical misjudgements or actions. Lastly, acknowledge that there may be an ethical issue. Too much focus on how the good outweighs the bad may lead to the disregard for ethical questions. Think about the situation from multiple angles to come to the most ethical conclusions.
Together, these steps and questions can be used to help reach the best ethical conclusions. Ethical issues confront hospitality finance, accounting and technical professionals frequently. Learning from the research and experiences of fellow financial and tech colleagues holds the overall industry accountable.
Ethical calibration ultimately leads to brand and consumer confidence. A firm ethical foundation for hospitality and other professionals is personally and professionally important. As Holcomb steadfastly reminded her audience, the good always wins out. The truth will eventually surface. It might be an old saying, but it is definitely a timeless one.
