Optimization: The Hotelier's Best Weapon Against an Uncertain Economy and Tight Labor Market
By Mark Heymann Chairman & CEO, Unifocus | March 10, 2019
The first quarter is already painting an interesting picture for 2019, with promising forecasts for growth in the hospitality industry tempered by the possibility of an economic recession by the end of the year. Here are just a few of the projections and points of view offered by experts that have contributed to this complex outlook:
- Hotel occupancy is anticipated to continue to grow for the 10th consecutive year, achieving a fifth straight record level for the industry.
- Restaurant sales closed strong in 2018, driving optimism that the momentum built will carry well into 2019.
- Hospitality continues to face a tight labor market, with projected unemployment remaining mostly unchanged.
- Wage pressure increases as more than 20 states raised the minimum wage, with the US hotel industry outpacing the nation in wage growth.
- Factors such as climate change or "weaponization of travel" may affect hospitality in ways that are difficult to predict.
- More than half of CFOs in the U.S. believe recession is likely by end of 2019 and Deloitte forecasts substantial slowing in economic growth in 2020.
These mixed projections mean the hospitality industry must accommodate short-term growth while planning for the possibility of a longer-term slowdown. It also must be flexible enough to respond to unexpected events, such as storms and other acts of nature or sudden downturns in tourism. And then there is the continued challenge of attracting and retaining talent in a low-unemployment environment. Put it all together, and the clear priority for hotel operators in 2019 is workforce optimization.
What Does it Really Mean to Optimize?
In simplest terms, optimization means consistently delivering against customer expectations to drive revenue, while managing costs to maximize profitability. Almost anyone can pursue a least-cost environment through cost cutting, but that approach is rarely optimal and usually results in compromises that hurt the business and brand. To truly optimize your operations, you must know your customer. And, you must focus your time, team, and budget on the specific things that keep them coming back.
That intent to return and recommend is the dependent variable in optimized performance, because achieving that level of customer satisfaction hinges on your workforce. All aspects of workforce performance-skills, attitude, availability, and timing-must be aligned if you are to meet the most important expectations of your customer. Because of this, employee engagement becomes a critical part of workforce optimization: In addition to knowing your customer, you have to understand your service giver's frame of mind and attitude when in the workplace.