NEW YORK— U.S. hotels’ profitability is expected to hit a record $25.2 billion in 2006. Granted, increases in occupancy, ADR, and RevPAR growth will have played a part in this success, but managers of U.S. hotels get points for gains in another area as well: productivity. In fact, while improvements in occupancy, ADR, and RevPAR are the cause of much self-congratulation in the industry, productivity gains tend to garner little attention. But the improving productivity picture is one of the industry’s unsung success stories. The results of a forecast on employee staffing levels by consultants PricewaterhouseCoopers (PwC)— reported here in a HOTEL BUSINESS® exclusive— may go a far way to change that. According to PwC, the number of employees per 100 occupied rooms is forecast to drop to 61.1 by the end of 2006. This is down from 61.5 employees at year-end 2005. The 2006 forecast, meanwhile, represents a continuation of a downward trend that goes back at least as far as 1990 when the number of employees per 100 occupied rooms employed by the industry stood at 72.7. According to the Bureau of Labor Statistics, hotel employment totaled 1.725 million employees in 2005, 4.2% below the 2000 level. PwC considers the “per 100 occupied rooms” metric to be a key measure of industry productivity. The findings come at a critical juncture for industry labor relations. The UNITE HERE union is taking an aggressive posture in negotiations with hotel owners in a number of U.S. cities where contracts expire this year. Increasing advances in productivity put added stress on these negotiations. With hotels requiring fewer workers, the union is under even greater pressure to improve the wages and benefits of its existing members. Two forces underlie the downward trend in employment numbers, according to Bjorn Hanson, a principal in PwC’s hospitality and leisure practice. “Normally by this point in the lodging cycle, we start to see some casualness in hiring, that is, management becomes a bit less aggressive in its approach to staffing,” Hanson said. “Managers start to ease up on their staffing policies. But we’re not seeing that in this cycle in the traditional way.” Secondly, the industry is doing a better job of managing the number of variable staffing positions. Hotels, after all, hire employees for both fixed positions and for part-time, seasonal, or temporary positions, a number that fluctuates. Housekeeping, front desk, and food and beverage are examples of departments that use a large percentage of variable workers. “Thanks to advances in technology, better controls are now in place to monitor this aspect of hiring,” Hanson said. Specifically, forecasting software has been perfected that allows for more effective scheduling. “When hotels can accurately forecast the number of occupied rooms they’ll have, they can be more assertive in staffing. They don’t have to allow for the over-staffing that might have occurred previously,” he noted. Scheduling software then helps apply the forecast and comes up with an accurate number of employees to schedule for a shift. “It can be done quickly and communicated efficiently to department heads and then to employees.” Ironically, the decrease in employee staffing has occurred during a period of significantly rising demand. “Despite this, management control of staffing has led to a slower rate of growth in lodging employment than the growth of lodging demand,” Hanson noted. In terms of types of hotels, upscale, upper-upscale, and deluxe full-service hotels have greater staffing needs than limited or select-service properties. In the past few years, there’s been considerable development at the luxury tier, mostly in mixed-use projects, but not to the extent where it impacts the larger employment trend. “The sheer number of limited-service rooms under construction is still so much greater than the number of luxury rooms being built that on a percent basis, we expect the decrease in the number of employees per 100 occupied rooms will continue,” he said.
