Hoteliers must not let the current labor shortage cause them to panic and make rash decisions regarding employee turnover. Instead, they should invest wisely in employees and be flexible to handle challenges as they arise.
Land, machine and people are the capital we employ to create enterprise. For this column, the enterprise is hotels, and our teams are the “human capital” we employ and deploy. Newly released data shows the U.S. unemployment rate to be the lowest in decades.
At the same time, many markets are seeing major increases in rooms inventory. The sharing economy blossoms. Migrant workers are returning to their native homes. As new hotels open, competition for a scarce resource—human capital—drives up prices (salaries/wages/benefits) for skilled labor, unskilled labor and talented management. The great game of musical chairs has begun. When the music stops, who will be left without a chair?
A competitor recently told me they have “virtually no employee turnover.” Nice to know and fun to brag about, but my inner voice thought, “Well you are either overpaying everyone or you are unionized.” But on further discussion, they pay very well, but they deliver guest satisfaction at ever-increasing rates and profitability.
Pivot … the stock market, while of late on a breather, continues its march northward, while long bond rates hover at 3%. Taxes have been cut, but most individuals have less disposable income because gas prices are rising. Financing for new-build hotels gets tougher by the week. The political landscape is riddled with dysfunction and governments are broke. The unions are feeling empowered and organizing aggressively.
All of the above is my déjà vu, all over again. It feels very much like 2007, before the meltdown that occurred in 2009, with an election in between. Always optimistic, I hope the labor shortage is just a byproduct of a robust economy that will continue its growth march with no end in sight. But a little voice keeps chirping (not tweeting), “Be ready, be ready, be ready.”
So back to the beginning: Let’s not panic about labor shortages, nor succumb to price wars, nor make counter offers to hold on to staff. (If you were looking to leave, you already have one foot out the door.) We need some healthy turnover. We must empower our teams to exceed guest expectations, and we must be ready and flexible to manage either growth or recession. Great managers are always in short supply, but even more valuable during turbulent times. Be ready, the music might stop.
George Jordan is senior vice president of operations at Oxford Hotels & Resorts, overseeing a cluster of three-, four-, and 4 ½ -star hotels, both operating and under development. Jordan has worked in hotels for over 30 years, including the Arizona Biltmore, The St. Paul, The Marquette, The Drake, Raffaello Hotel, Hotel Felix, and most recently The Godfrey Hotel Chicago. New openings currently orchestrated by Jordan include the Godfrey Hotel Boston and LondonHouse Chicago. He rose through the ranks while attending college at University of Southern California and Arizona State University, where he obtained a B.S. in finance. He also has served as area food and beverage director for Hilton International, based out of the Drake Hotel Chicago, and also as hotel manager at the Drake. Jordan joined the Oxford team in 2009 as area general manager; he was promoted to senior vice president in 2012. His daily duties include oversight of Hotel Felix, Hotel Cass, Godfrey Hotel, and contributes his operational and marketing expertise to acquisition activities. Jordan is a well-respected leader and a member of many Chicago civic organizations including The Magnificent Mile Association, CCTB, DLC and serves on the board of directors for Lawson House YMCA and on the advisory council of De Paul University’s School of Hospitality. Jordan writes a quarterly column for Hotel News Now and is slated to be a cast member in an upcoming reality TV series.
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