HOTELS IN THE U.S. managed to control their payroll costs better than the previous year, thus increasing their gross operating profits, according to a report from CBRE Hotels Americas Research. Still, the largest increases were seen in contract labor, said Robert Mandelbaum, CBRE’s director of research information services.
In 2017, 46.2 percent of the properties studied in the 2018 edition of Trends in the Hotel Industry paid contract or leased employees in at least one of their departments, a 45.3 percent increase from 2016. Contract and leased labor also saw the greatest percent increase in payroll expense from 2016 to 2017, 4.2 percent.
“The use of contract/leased labor is frequently cited by operators as a tactic that can be implemented to overcome labor shortages, and potentially control the rising costs of compensation,” Mandelbaum wrote. “Given the difficulties hotels are having finding qualified employees, it is logical that the highest incidence of contact/leased employees was observed at the property types in need of the greatest number of employees.”
According to the report, 73 percent of resorts and 62.7 percent of convention hotels reported making payments to contract workers, the highest percentages. Extended stay hotels had the lowest percentage using contract workers, 35.5 percent.
On a department level, food and beverage and rooms departments tied for the highest percent of using contract labor at 32.2 percent each. “Staffing levels in these departments vary with business volumes,” Mandelbaum said. “Therefore, managers have found it more prudent to operate these areas ‘on demand’ with temporary employees provided by staffing agencies.”
Mandelbaum concludes that the increasingly tight labor market for the industry will continue to make it difficult for hotels to find qualified employees, as well as driving up salaries and wages.
“Not only is labor the largest single expense within a hotel, it has become the most difficult operational element to manage,” he said. “The ability of operators to creatively find staff, satisfy employees, improve productivity, and continue to provide quality guest service will go a long way towards maintaining growth in profits.”