Keep Gig Economy & Labor Costs from Lowering Revenue

Tammy Cohen, PHR, SHRM-CP
April 12 2016
The hotel and lodging industry currently employs approximately 1.9 million people and represents $176 billion in revenue, but recent and pervasive challenges could lead to smaller revenue increases for traditional lodging locations. Traditional hotels already lose business to “sharing economy” companies like Airbnb, the online portal that matches travelers with unique, often privately-owned lodging.
To hold or expand the current market share, traditional lodging chains will have to resolve their biggest challenges, cut costs, and innovate. Since approximately 33% of hospitality revenue goes to labor costs, leaders will focus many efforts on improving industry employment practices. Some of the most persistent challenges in the hospitality industry include talent acquisition and employee turnover.  

2 Ways to Reduce Hospitality Labor Costs

The hospitality industry relies heavily on positive customer opinion to thrive. With so many lodging options now available, the quality of your customer service can determine whether consumers will return to your location. Finding and keeping great employees can give your location a competitive advantage over limited-service locations as well as encourage repeat visitors.

1. Improvements in Acquisition Processes

Hospitality businesses report that one of their biggest challenges lies in finding the right employees tohelp build membership communities. A plethora of acquisition channels provide candidates that can be both overwhelming in number and underwhelming in suitability. Hoteliers report that the most successful channels for recruiting quality staff include:
    • Employee Referral/Word of Mouth
    • Job posting on the hotel’s/organization’s website
    • Online recruiting websites and job boards
    • Social Media
    • Staffing/temp agencies
Other, less utilized methods of talent acquisition include print ads, University and Technical School recruitment, and job fairs. Additionally, advances in talent acquisition software are making it easier to sort candidates digitally so that human resource professionals and recruiters can focus on assessing only the qualified candidates. A tech-powered background screening process streamlines the actual hiring. Established, accredited screening providers often provide an online portal that allows hiring personnel to initiate compliant applicant authorization and consent procedures, order background screening services, and collect results 24/7. They can also manage the entire process so that all you have to do is choose from a resulting pool of qualified and screened candidates.

2. Reducing Hospitality Turnover & Retaining Great Talent

Employee turnover can reach 31% and contributes significantly to the high cost of labor in this industry. More than half of the cost of replacing staff is accounted for by productivity loss and another 14% goes into orientation and training for new employees. Some of this cost can be offset by hiring the right employees in the first place, and more can be saved by improving retention practices. Many companies are combating turnover by focusing on creating an engaging corporate culture. Research shows that engaged employees are more likely to stick around, stay productive, and create a positive customer experience, so it makes sense that retention can be improved by addressing employees’ needs beyond pay and benefits. Some of the most effective retention strategies include:
    • Providing opportunities for advancement,
    • Offering on-the-job training & development,
    • Recognizing good work,
    • Encouraging work/life balance,
    • Practicing trust, respect, consideration, & fair treatment, and
    • Facilitating engagement between employees & managers.
Hiring quality employees and creating retention policies that address more than just pay and benefits have both proven to reduce employee turnover. You can easily cut labor costs and build a culture of loyalty by engaging your employees, involving them in decisions, and treating them as members of a team that’s working together to succeed. With InfoMart’s suite of background checking services, you can ensure the best available staff keeps your customers coming back. We understand that service industries need to quickly fill openings with quality workers, which is why we’ve streamlined our process for maximum efficiency so that you can view background results within hours, not days. We provide fast, accurate, and legally compliant information to help you choose the best employees to represent your brand. We pride ourselves on the simplicity and convenience of our online system and nurture quality business relationships with our world-class customer service and unique understanding of hospitality industry hiring requirements.

About Tammy Cohen

Tammy Cohen, an industry pioneer and expert in identity and employment screening, founded InfoMart 30 years ago. Deemed the “Queen of Screen,” she’s been a force behind industry-leading innovations. She was most recently the first-to-market with a fully compliant sanctions search, as well as a suite of identity services that modernizes talent onboarding. Tammy revolutionized the screening industry when she stepped into the field, developing the first client-facing application and a due diligence criminal search that has since become standard for all background screening companies. Cohen has received national awards and honors for her business and civic involvement, including Atlanta Business Chronicle’s Top 25 Women-Owned Firms in Atlanta, Enterprising Women Magazine’s Enterprising Women of the Year award, the YWCA of Northwest Georgia’s Kathryn Woods Racial Justice Award, and a commendation in the 152nd Congressional Record.

About InfoMart

InfoMart has been revolutionizing the global background and identity screening industry for 30 years, providing businesses the information they need to make informed hiring decisions. They develop innovative technology that modernizes talent onboarding, including a first-to-market biometric identity authentication application and a verified sanctions search. The WBENC-certified company is a founding member of the Professional Background Screening Association, and they have achieved PBSA accreditation in recognition of their consistent business practices and commitment to compliance with the FCRA. The company is dedicated to customer service, speed, and accuracy, and it has been recognized for its success, workplace culture, and corporate citizenship with over 45 industry awards. To Get the Whole Story on InfoMart, please visit, follow @InfoMartUSA, or call (770) 984-2727.

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