Rewriting Possibility: 81%
Hence there has been an Increase In per-employee costs by default,” he says. Hoteliers say their payroll costs have almost doubled in the last three years. Dill Purl, managing director at Stardom Hotels and Resorts, says that today, typically the Industry payroll costs range anywhere between 20% and 30% of a company’s average revenue, up from 15-17 three years ago. Companies blame this on high attrition rates across the industry, over-hiring and growing sizes of food and beverage outlets.
Perhaps the biggest reason for the manpower crisis in hotel industry is that a charity of fresh hotel management graduates prefer to Join allied Industries. “We have seen that students from hotel management Institutes move to other areas Like banking sector, travel and tour operators, smaller restaurants, etc,” S Cracker, principal of Institute of Hotel Management at Dark in Iambi, says. He says that only around 30% of the students Join hotel Industry, while the rest move to other Industries or pursue higher studies. The main reason why students choose other sectors is due to better pay packages, working hours and conditions than hotels,” Cracker says. With hotel room supply in the country estimated to Increase 111% over the next five years, the manpower carols may get a lot worse for the industry . Ashcan Shrill, regional director of human resources at Accord Hotels India, says payroll costs can go as high as 35-40 % of annual revenue for a new hotel property. According to an HAVE report, hotels’ average payroll costs were 20. % of annual revenues last year and the average payroll cost per employee (including labor/Job contract ) was 2,77,858. Rajah Gaul, president at The Ella Palaces, Hotels and Resorts, says the group has always had higher manpower costs than regular Industry standards and there Is a problem of attrition. “We have had some attrition , but you always lose people when another brand offers them growth,” he says. At Intercontinental Hotel Group, attrition is highest in food and beverages department at around 20%. We see that F&B witnesses more attrition as it is a seasonal business,” says Kava Versa, director of human resources at InterContinental Hotels Group, South West Asia. Hotels are now trying Deterrent strategies to manage tenet snorkeling workforce. The Ella, where payroll costs account to 22% of its revenues, plans to reduce the average manpower to room ratio to 2. 2:1 from 2. 4:1 . The Alit New Delhi hires Just enough F staff for the entire year but increases it in the peak season.
Oberon encourages cross-exposure at its global properties to incentives staff, while Accord is developing a variable talent pool with people who can play multiple roles, saving on manpower. “When business travel is lower, we move talent to busier properties . This way we have been able to maintain bottom lines when there is lot of churn appending in the industry ,” Accord’s Shrill says. The Lloyd in New Delhi, where payroll costs go as high as 30% of revenues, has increased work cycle from five-day week to six-day week. We ensure employees are encouraged to take vacations in the summer months of the year, when footfalls are lower,” the hotel’s general manager Robin Backdoor says. “We have reduced our expect staff too, which has saved us a huge chunk of manpower costs,” she says. Stardom properties have outsourced their entire room-booking operations to a centralized system. We also ensure our employees grow into senior positions in our Middle-Eastern properties where there is a promise of greater growth,” says Purr of Stardom.
A senior person in the industry who did not wish to be named says groups such as The Oberon and The Tag have traditionally been saddled with an aging workforce that puts up a lot of resistance and has a large amount of trade union posturing. But mid- market hotel groups such as The Lemon Tree Hotel have consistently maintained optimum staff-room ratio. The entire workforce of 2,147 employees across the tools and an employee costs make up for 18% of The Lemon Tree’s revenue, much lower than luxury hotels.
Rural Bandit, president and executive director at The Lemon Tree, says they hire from 30 campuses across India. “Our philosophy is to hire at the early stages of a person’s career and then groom high-potential employees on a fast track growth path,” he says. Though the entire industry is starting to bring parity in compensation structures and is looking at innovative ways towards employee retention, the huge number of new rooms coming up will lead higher manpower costs, Antiwar Nag of HAVE says.