As the cost of labor continues to grow, the founder and president of owner, operator and asset management company Legacy Ventures offers advice on how to reduce that expense.
PHOENIX—Hoteliers are concerned about slowed revenue growth matched with increasing expenses, particularly as the industry cycle nears its peak.
David Marvin, founder and president of Atlanta-based Legacy Ventures, shared his strategies for how to control costs as revenue continues to grow, though at a slower pace.
Speaking with Hotel News Now at this year’s Lodging Conference, Marvin said the recovery has been anemic. Demand has slacked, but is growing, and supply remains within the long-run averages. Therefore, he expects the industry to bump along at its current level of revenue per available room with some slight improvement in the future.
“I don’t see the phenomenal results achieved in, say, 2015,” he said.
The cost of labor is one of Marvin’s greatest concerns, he said, but he said the realities of the industry make it hard to cut. He said hoteliers would be better served finding creative ways to increase revenues or cutting other costs.
“Probably the most effective strategy … is to really invest in employee training and retention,” he said. “I don’t think we can escape the fact that we’re going to have to pay employees more to retain them. But if we’re not ahead of that curve, and if we lose our employees to competition, particularly our best employees, it’s terribly expensive just climbing the indoctrination curve with new employees.
“So I think having a market-competitive or even superior-to-market compensation strategy, and also I think having a culture that people want to be affiliated with—they want to be on a team—is a very good means of retaining employees.”
Watch the video to hear more of what Marvin had to say about ways to control cost.