Looking For Labor

By Steve Pike

Thirteen months ago, the hospitality industry—from luxury resorts to mom-and-pop restaurants—was letting go of employees as a result of the COVID-19 pandemic. Now in the middle of Spring 2021 and with a potentially strong summer on the horizon, many of those resorts, hotels and restaurants are trying to get back those same employees, as well as search for new employees.

But government stimulus checks, tax refund checks and unemployment benefits—up to $600 per week in some states—have kept people from returning to the workforce. That’s created an unprecedented glut of job openings in the hospitality industry.

It’s not unusual, for example, for a hotel or restaurant to post a sign—while reminding guests to wear masks and social distance—that also asks them to be kind to what could be a skeleton staff of workers.

Job fair postings by resorts and restaurants appear weekly on social media. Some resorts are offering signing bonuses (paid after anywhere from 30 to 90 days) to attract new employees. Others have had to limit occupancy to ensure quality of service.

“You have to be creative,” said Tom Mulroy, general manager of Plunge Beach Resort, a boutique hotel in Lauderdale by the Sea, FL. “The first thing you have to do is retain the staff you have.”

The Bureau of Labor Statistics earlier this month reported that the U.S. economy gained only 266,000 jobs this past April, as opposed to the one million jobs that had been forecasted. Not all those jobs gained or unfilled are in the hospitality industry, of course, but the numbers reflect a trend that has impacted the industry.

In South Florida, it’s estimated there are currently 25,000 jobs available in the hospitality (hotel and restaurant) industry. It’s a predicament that few experts saw coming as a full recovery begins to become a reality.

“Positions that you normally would never have a problem staffing—like bartenders—you’re finding hard to staff,” said Mulroy. “It’s always been challenging to find some positions, like line cooks and room attendants—but this is crazy.

“We’re all looking for talent in all positions. A property like mine—at the beach—we’re looking at occupancy levels similar to 2019, but with 50 to 75 percent of the staff.”

The worker search isn’t just a challenge in South Florida. Even places such as fabled Pebble Beach Resorts along the Monterey peninsula in California, is feeling the pain.

“Business has come roaring back, which is fantastic, but we’re having trouble finding qualified staff to provide all the work we need,” said John Sawin, vp and director of golf at Pebble Beach Resorts. “We’re spending a lot of time on hiring.”

Requirements for employment at the resort, Sawin said, haven’t changed, “but before (COVID-19), if we put up a job opening, we’d immediately have 10 to 15 qualified applicants. Now we don’t have that, so we’re almost doing more recruiting. Before, they came to us. But we have found some nice veins—some of the college teams whose players go to school online—have the abilities to work.”

When will the employee drought end?

“September, I believe, is when the constrictive effort for people not to come back to work is kind of released,” said Kai Fischer, general manager of the new Hilton Aventura Miami Hotel. “I think it’s easier today to find management talent than the hourly talent. We’ve had to be unconventional in our efforts. Many hourly (employees) are staying home and taking advantage of unemployment. They’re not ready to come back to work.”

COVID-19, Fischer said, basically gave the hotel industry the “wake up” call it needed to re-identify itself and re-formulate a better working model for owners.

“As hoteliers, we were leading the direction on service, but in some ways losing sight of return on investment from an ownership standpoint. When push came to shove, you had to dwindle down your operating model to the most viable individual you had in the operation to give the best services that the guest really required, rather than what you thought they wanted.

“I’ve turned into an art collector, sommelier and a food critic. Every hire I make, I’m looking for the best value and the greatest talent,” he concluded.

 

Survey Says…

There are a number of signs of optimism for a lodging industry rebound sooner than later, according to a recent survey released by the Hospitality Asset Managers Association (HAMA).

In addition to performance forecasts for this year, topics covered in the “Spring 2021 Industry Outlook Survey” included current acquisition appetites, new brand/management plans and labor issues.

Larry Trabulsi, EVP at CHMWarnick and current HAMA president, discussed the overall findings.

“In general, the story was things are still tough but maybe there’s a little bit of light at the end of the tunnel. Things seem to be getting better in a lot of markets, and hopefully that’s a sign of good things to come,” he said.

For example, the survey—which canvassed roughly 100 HAMA members—indicated that more than 50 percent of respondents are projecting a 25 to 50 percent decline in RevPAR for their portfolio in comparison to 2019 levels. There was a much smaller percentage, less than 25 percent, expecting a 50 to 75 percent decline in RevPAR.

Chad Sorenson, managing director and COO, CHMWarnick and Marketing Chair for HAMA, sees that as a reason for optimism.

“It’s a good indicator of what we’ve all been projecting and that were going to really see that recovery kick in after Memorial Day. The back half of the year should be markedly better than the front end of the year,” he said.

Sorenson added, “It’s playing out the way most of us were hoping it would and frankly quite a bit better in certain markets, such as Florida and resorts on the coast. And for smaller secondary and tertiary cities in the Midwest the recovery is well on the way. The golden ticket there really has been youth and collegiate sports.”

Furthermore, according to the survey, more than 50 percent of HAMA members believe RevPAR will return to 2019 levels by 2023. Not quite 10 percent believe it will occur as early as 2022, while approximately 37 percent believe it will happen in 2024.

One of the more interesting findings of the survey is that nearly 30 percent of respondents are contemplating brand or management changes as part of their recovery strategy. Approximately 5 percent said they were likely to change brands, 10 percent foresaw changing management companies and roughly 15 percent noted they would change both.

Sorenson explained the aforementioned results.

Owners are having to reset their investment strategy. This has presented an opportunity for ownership groups to really try to figure out what the best positioning and structure [of their hotels] looks like going forward so I think that’s what’s driving [these numbers]. To have that many owners thinking about changing things up, there’s a lot that’s going to take place here in the next 24 to 36 months,” he commented.

Trabulsi, meanwhile, noted those numbers are “definitely a sign of volatility in the market right now.”

The survey also took the pulse of the acquisition market with nearly 80 percent of respondents saying they were actively pursuing a deal. From a pricing standpoint, in urban markets for full-service and luxury properties, nearly 45 percent of those surveyed anticipated price discounts of 11 to 20 percent. While one respondent believed discounts could reach 41 percent or more off pre pandemic pricing, approximately 15 percent felt discounts would be as low as zero to 11 percent.

“I think this is indicative of the amount of capital available that is on the sidelines,” said Trabulsi.

Sorenson added, “I think we’ll continue to see more off-market transactions, especially for high quality assets.”

When it comes to distressed assets, approximately 15 percent of participants expected to either hand back keys to the lender or enter into a forced sale situation on at least one of their hotels. In addition, nearly 10 percent noted they had already done so.

Meanwhile, the three factors most concerting to participants right now include labor availability (75 percent), demand (60 percent) and labor costs (55 percent).

Trabulsi emphasized the labor challenges that still exist.

“Pre-COVID when we were running 80 plus percent occupancy we were all talking about how we didn’t have any labor. Now we’re running 30 and 40 percent occupancy and we still have no labor. There a lot of factors, the industry has lost people on furlough, government programs where people want to stay on sidelines, kids not being in school, but it’s interesting we have the same problem we had when we were 40 occupancy points higher than we are right now,” he said.

“I think most believe that the summer season is going to be very robust, with both air travel and drive travel, but the operating environment is going to be very challenged because of the labor piece,” concluded Sorenson.

 

How An Integrated PMS Helps Grow TRevPAR

In case you need a refresher on your acronyms, TRevPAR stands for total revenue per available room. The key difference between it and RevPAR is that it takes into account all other outlet purchases from each guest to give a more holistic picture of sales and growth.

As a basic example, consider a couple traveling for a relaxing getaway versus two single-occupancy business travelers, both midweek. While the couple may take up only one guestroom versus two, its utilization of the restaurant, spa and other amenities will be substantially higher than the corporate guests. Having differential data on these types of profiles can thus be used to make better decisions about what will maximize revenues instead of only what will maximize occupancy.

As it concerns the coming travel recovery, we want to make sure you aren’t leaving money on the table by appealing to the highest TRevPAR customers, and there’s no way to go about this nowadays without a PMS that brings in data from numerous sources. Before the advent of COVID-19, hoteliers were often fine with a siloed approach to revenue generation, but with physical distancing and room cleaning buffers preventing us from maximizing guestroom occupancies and outlet covers, we need to motivate every customer to spend everywhere.

Discussing this complex balance of different guest profiles to optimize total revenue, we were delighted to reconnect with Warren Dehan, President of Maestro PMS, a vendor located right here in our hometown of Toronto. “You need holistic analytics on the entire customer journey, not just occupancy numbers to yield room rates month-over-month. With budgets tighter than ever, you want to be able to target those future guests who are more likely to use your restaurant, your spa, your golf course or even buy souvenirs at your gift shop. With all the sales data from these outlets flowing through an integrated analytics module you can see what profiles are staying two nights versus three and dining with you every night or picking up a spa treatment,” he stated.

Below are five PMS features you should use to boost TRevPAR.

 

  1. Filtered marketing. Motivating return visits will be critical for the first two quarters of 2021, but people are already oversaturated with emails, so you have to hit them with a strong call to action. This means being able to query those past guests who partook in specific amenities or activities then incentivizing them appropriately. Filtering means getting more granular than that by isolating for those guests from a specific geographic territory and LOS so that you can motivate longer-staying customers. Moreover, doing this all within a PMS means you have physical addresses on file to send out some snail mail and cut through all the eblast noise.

 

  1. Revenue management integration. No doubt your DoSM and revenue director are already talking at least once a week, but perhaps some of that conversation can be digitized. That is, marketers should have access to an RM module within a PMS so they can check on pace and identify gap periods for testing packages and promotions. To build off the intelligent filtering from the first feature, discovering some of the more unique characteristics of some of your guests will also make you more adept at finding similar customers.

 

  1. Amenity and labor management. The big thrust for TRevPAR is engaging your hotel guests to increase ancillary revenues. By connecting, for example, the spa to your PMS, you can identify the differential behavioral traits of day spa versus stay spa customers to then make a decision about how to increase the latter. An amenity integration like this would also result in having data on treatment room utilization (TRU) so that you can optimize what’s on the menu and how to schedule spa providers. The same sort of granular analysis can, of course, be done for F&B when there’s a two-way POS connection.

 

  1. Specific feedback questions. When you can link what a guest bought onsite to their reservation, then you can also send out surveys that ask directly about those amenities instead of the more generic post-stay questionnaires that won’t give you detailed insights. In doing so, you can then pinpoint which departments may need some coaching as well as which amenities are perceived as true positives for the experience to then use those in future messaging or promotions.

 

  1. Mid-stay surveys and error recovery. What’s the point in sending a complimentary fruit tray to a guest’s room as a form of apology if that guest has already left the hotel? Building on the previous point, with amenity utilization directly tied to a guest’s reservation, you can not only send out a more bespoke post-check-in survey but you can also better identify any problems and act upon those errors well before the guest leaves.

All Part Of The Plan

NEWTON, MA–Describing domestic franchising as a “when, not if” proposition all along, Sonesta International Hotels Corp. President and CEO Carlos Flores detailed the company’s recent launch of a global hotel franchising organization as well as its growth strategies going forward.

Speaking during the ALIS 6×8: Recovery Top Of Mind series, Flores touted the latest decision for the company, which now has some 1,200 franchised and managed properties following its deal to acquire RLH Corporation in March.

“Thinking about our next steps this was part of the plan. The acquisition of Red Lion allowed us to put that into hyper speed. In the short term a big part of the growth trajectory, or part of our plans and strategies for the collective Red Lion and Sonesta organization, is to grow up and a lot of that growth will come from the franchising not just of the existing Red Lion brands, but as we retrofit the portfolio to support the Sonesta brand as well. We’ll see a lot more unit growth from getting that platform up and running, but beyond that we see a tremendous amount of white space as we look outside of the U.S and to other opportunities that will absolutely amplify our growth as a brand beyond the recent investment decision with domestic franchising,” he said.

The new franchise organization is led by Keith Pierce, who was named as EVP, president franchise & development, upon closing of the Red Lion acquisition last month. Sonesta also recently appointed Brian Quinn as chief development officer to lead the company’s franchise growth effort. Quinn brings more than 20 years of senior development and sales management experience to Sonesta including nearly three years as chief franchise sales officer at Red Lion.

The company—which has been involved in international franchising and/or licensing for many years—has significantly expanded its portfolio within the past year through assuming management contracts of properties from Service Properties Trust. The company effectively severed contracts with major brands such as Marriott, IHG and Hyatt.

Flores used the word “preparation” in describing the entire process and noted when he joined the organization in 2012 he had been charged with preparing the management side of the business to support a growing domestic portfolio.

“As the crisis turned into an opportunity for Sonesta a lot of that inward work that we had been focused on to a large extent over the last 9 years paid off in dividends,” he said.

 

 

 

 

The Power Of Pent-Up Demand

Citing pent-up demand for travel and increased future bookings, as well as a recent uptick in performance, a trio of hotel executives expressed optimism about a lodging industry recovery occurring sooner than later.

Speaking on a panel entitled “Executive Outlook: Assessing The Current Lodging Industry Landscape,” Ron Pohl, COO, Best Western Hotels & Resorts; Bradley Wiens, President, True North Hotel Group; and Brent Rumsey, vp, franchise operations, RLH Corporation, all weighed in on current conditions during BITAC’s Virtual Symposium 2021 last week.

“I think people have had enough of sitting at home and not being able to travel and I believe that we’re on our way,” said Pohl.

He also pointed out that booking windows are finally increasing. “We’re seeing pacing for 2021 almost as strong as it was in 2019. I think that’s a leading indicator that people just want to get on the road and play honestly,” commented Pohl.

Rumsey reinforced the point.

“People are pent up and they want to get out and so I think our hotels are going to see a lot of growth in both ADR [average daily rate] and occupancy, especially with the summer travel,” he said.

Rumsey did, however, add one caveat. “I think the recovery implies that we’re all coming back and I don’t think we’re all coming back. I think it’s not equal across all segments or markets,” he said, specifically noting that group business and corporate travel remain a concern.

Wiens, for his part, noted that True North’s portfolio of hotels has seen double-digit increases in RevPAR [Revenue per available Room] for the first three months of 2021.

“It’s exciting for us to see the uptick and we attribute it to two factors. One is as everybody knows there is a pent-up itch to get back on the road and go do something; to get out of your house or get out of your office. And the second one is people are getting vaccinated. So both of those factors are positive and promising and we’re pretty excited to see what’s coming in Q3 and Q4,” he stated.

The brand executives talked about the need to pivot throughout the downturn of the past year in an effort to help reduce the financial strain on their owner partners.

“Like many hotel companies we paused any PIPs [property improvement plans] at our properties. So for the last 12 to 14 months most of our properties haven’t had much in the way of capital improvements at all. We’re still in a wait-and-see mode about how hard we push this, but at some point just out of necessity we’re going to need to address these capital projects because the guest expectations are going to come back and we need to be able to meet those,” said Rumsey.

Pohl acknowledged the importance of helping owners through this difficult period, as well as the community in general.

“Our goal was to not lose any hotels through this. We’ve done a pretty good job with that as well as something that we’ve never entertained before. We’ve allowed hotels to be leased out for a period of time if government would need them for essential workers or there were other demands for that hotel. We would allow them to operate that hotel in that fashion for a period of time and then return it back into the Best Western reservation system. So we’re really trying to be accommodating through it,” he said.

Rumsey noted RLH Corporation has also gotten creative with solutions.

“We went down that road as well allowing some of the agencies to take over the hotels and then return them back to normal when they were done, which was a really a need at the time. We’ve also seen some of our owners that have dual properties close one and house everybody at the other one. We’ve allowed that to go on for a little while to help the owners through a tough time. These are all unprecedented things we would never think to do before,” he said.

From the ownership perspective, Wiens noted that growth opportunities have started to emerge despite the downturn, both in terms of acquisitions and new builds.

“I’ve been approached by several brokers that are willing to pay based on numbers from ‘19 in order to build their portfolios. We’ve been fortunate that the assets have been performing and we’re not in the position where we have to unload,” he said.

Wiens did note that the company is eagerly anticipating the opening its first managed AC Hotel by Marriott in Tuscaloosa, AL, next month.

“We’re pretty excited about that and we’ve got several other opportunities that have been sitting on the sidelines for a little bit, but now we’re seeing a little bit of traction. We want to keep doing what we do and that’s building our portfolio in great markets with great product,” he said, noting that local lenders are showing more of an appetite for projects depending on the leverage ratios.

While the lodging industry has been challenged during the past year, alternative forms of lodging, such as Airbnb and home rentals, have thrived in many markets. While Pohl acknowledged “home sharing is here to stay” he detailed some things hotels can do counter their momentum.

“I see hotels coming back and maintaining their market share in this. I think what’s most important is we’ve spent a lot of time throughout the industry focusing on levels of cleanliness and how we’re going to protect customers, but that’s still top of mind. We’ve got to practice what we preach in this. Our customers are still expecting that in most cases and we have to live up to that. When they find that we’re not or falling short of those expectations that presents a problem,” he said.

Rumsey reinforced the point.

“I think it’s predictability and trust. I think hotel companies have done a great job in being very transparent about our cleaning and COVID protocols. We were up front and transparent right out in front of the consumer. I think we established a lot of goodwill and a lot of trust with that kind of messaging that we went out with and the protocols we put in place and I see those continuing down the road,” he added.

The panelists concluded by addressing some of the top challenges going forward.

“Everybody’s struggling to find the right labor force because they were either furloughed or laid off and these individuals have gone elsewhere. So owners talk to me a lot about how I’m going to help staff my hotel as business is returning, but I’m still optimistic about the future,” said Rumsey.

Wiens acknowledged the labor challenge as well, but is encouraged as a result of the increase in bookings going forward.

“The fact that we have this pent-up demand is really going to benefit everybody. The biggest challenge we’re going to have is getting back to our rate. Hopefully that will be a focus as occupancies return,” he said.

“I think it’s also important as an industry to look at some of the changes that we made with breakfast, housekeeping and mobile apps and where those go in the future because I think there’s changing expectations as it relates to that. I think it’s an opportunity for brands and hoteliers to benefit from reduced operating costs for hotels as we look to the future,” concluded Pohl.

 

 

 

Reaping The Rewards

For more than a decade Distinctive Hospitality Group (DHG) has made a habit of being proactive with its portfolio consistently reinvesting in its unique, high-end hotels. This strategy has served the company well in general, but even more so during the ongoing pandemic, a time when consumers are decidedly more discerning with their dollars.

The Natick, MA-based privately-held ownership and management firm—which was founded in 2010 and includes properties in the Boston area, as well as Connecticut—is led by President and owner Lou Carrier.

A 30-year hospitality veteran, Carrier asserted that the company’s five hotels were “running very hot” in 2018 and 2019 prior to the outbreak of the pandemic as he explained the company’s long-term approach to the assets, which are both branded and independent.

“We’ve always done the right things by making investments in the properties and we’ve been rewarded for it in terms of their performance. We’ve done so with the mentality of a hands-on ownership group and an expectation the investment will always come back around,” he said.

Carrier—whose extensive background includes The Wit Hotel in Chicago—acknowledged that visitors have definitely taken notice of DHG’s approach.

“We’ve gotten a lot of pats on the back and thank you’s from guests. It does make a difference when you’re comparing other properties, especially now as people have a wide range of choices. You have to have a property that is well taken care of and doesn’t look beat up; people notice it. They say, ‘I’ve got a choice that I might not otherwise have, I’m going there.’ Through that we’ve been able to steal our fair share of business. It really does matter,” he commented.

The company’s portfolio—which was started with three hotels acquired from The Peabody Group—includes The Verve Hotel Tapestry Collection by Hilton, Boston Natick; Hampton by Hilton Natick, MA; Holiday Inn Boston/Bunker Hill, Somerville, MA; Madison Beach Hotel, Curio Collection by Hilton, Madison, CT; and Hilton Mystic, Mystic, CT.

With the exception of mandated closures last spring, Carrier pointed out that the properties have all remained open throughout the past year and have performed reasonably well despite what he described as soft markets.

“We’ve been open so as a consequence we’ve been leading our markets as others have closed. Because we’ve been out there we’ve been communicating and doing the right things and trying to help people through this process. That’s created some really great loyalties for us. That’s sort of what it’s all about, giving and getting,” he said.

Meanwhile, in discussing any future growth plans, Carrier noted the company is not necessarily focused on big numbers but would like to “settle in” around 10 or 12 hotels.

“That remains our focus and we’ve stayed pretty true to plan. Our biggest focus now is creating not just solvency, but continued success out of the hotels that we have. As soon as we’re able to jump on something else we’re absolutely open to it, and geographically it makes sense for us,” he said, adding that he is bullish on the Florida market as well.

Carrier did acknowledge there is likely to be no shortage of properties available as a result of financial distress incurred within the past 12 months.

“I think we recognize the fact that there are going to be many opportunities,” he added.

Aside from helping create The Wit hotel brand as its COO and his decade of running DHG, Carrier’s experience includes some 20 years at the property level, including positions with Loews Hotels, Stouffer Hotels and Resorts, and the Hard Rock Hotel brand. He is joined on the executive team by partner and brother Mark Carrier, who is also President of B.F. Saul Company Hospitality Group, as well as David Hart, President, Hart Hotels.

Carrier went on to describe the company culture and emphasized how it has helped DHG survive the difficult conditions of the past year.

“We’re a highly creative group that is frugally managed and we very intelligently make investments. One of our ethos statements is ‘you’ve got to give to get.’ Exceptional guests experiences come back to you, regardless of the brand that we have. The culture is to deliver on the brand promise and to accentuate that with personality and creativity,” he said.

Carrier continued, “we have people who are both creative and fiscally savvy and you can’t have one without the other for our organization to thrive. One of the reasons we’re still here right now is we’ve got really sharp people who understand the value of a dollar in a time like this. It really does make all the difference in the world,” he said.