HB on the Scene: Looking Ahead—The future of hospitality operations

If the hospitality industry has learned anything in the past few years, it’s that we need to operate efficiently and creatively to succeed in the future.

Inflation, supply-chain issues and the labor shortage continue to plague our industry, and while numbers show signs of hope, the consensus among experts has been the same: We need to innovate to maximize profits.

At the recent Hotel Business executive roundtable sponsored by Actabl and hosted by Remington Hotels at the Melrose Georgetown Hotel in Washington, DC, leaders gathered to discuss this very issue.

Moderated by Hotel Business VP, Content & Partnerships Christina Trauthwein, the panel included Sloan Dean, CEO/president, Remington Hotels; Chris Green, divisional president, Remington Hotels; Adam Glickman, VP, marketing, Actabl; Jason Luo, CRO, Actabl; Paul Bennie, VP, strategic accounts, Actabl; Greg Winey, president/principal, NorthPointe Hospitality Management; Brian Quinn, chief development officer, Sonesta; Chip Rogers, president/CEO, AHLA; Ben Seidel, CEO/president, Real Hospitality Group; Naveen Kakarla, president/CEO, HHM; Helinda Lizarraga, president, Aligned Hospitality Management; Evens Charles, founder/managing principal, Frontier Development & Hospitality Group LLC; and Adam Gollance, CEO, Modus by PM Hotel Group.

The conversation began with a look forward to 2023. What should hoteliers focus on? What does the future hold for hotel operations?

“Next year could be a really good time to lock in your talent plan, raise some rates [and] do a little bit of renovation,” Quinn said. “I think we all deserve to run through the tape and enjoy the occupancy and try and heal up all the businesses after everything we’ve been through.”

Glickman noted that there’s also a real opportunity to protect profits, especially as rate continues to rise and inflation impacts wage and labor costs.

“As we get into more city center hotels having better success, that’s going to impact the hours of labor per occupied room,” he said. “As hours of labor per occupied room goes up, wages go up, and that impacts profits unless you start making strategic decisions, helping you get more done with less. You need to optimize the labor you have. I think a big part of 2023 is how you dial up optimization of labor so that you can protect the profit generation you made this year and heading into next year.”

And profits exist outside of the guestroom as well, especially as more people work remotely, using hotel spaces as home offices.

“Our occupant per room is up, and it’s something the industry should do a study on because what it’s doing is putting a strain on restaurants and lobbies,” Dean said. “We see this trend in housekeeping because there’s the trash in the room and it takes longer per occupied room to clean. But, it also presents an opportunity for full-service hotels to drive more bar contribution to do other things that you maybe didn’t before because your mid-week traveler isn’t what they used to be. It’s a strain but an opportunity. You need to learn how to monetize that and reinvent some of the public spaces.”

Technology is crucial in this department as it not only helps operationally but, as Dean noted, presents opportunities that we didn’t have in the past.

“How many people here have created policies that allow for remote work at your companies?” Rogers asked, to which all of the participants raised their hands. “And, for the most part, people aren’t remotely working from home.”

Guests are changing—they’re traveling for leisure during the workweek and they’re bringing their families along with them. In fact, Rogers noted, if hotels took all of the people traveling for bleisure and pushed them out to the marketplace, the industry could really thrive.

“A word I use a lot in leadership is curiosity, and I think we’ll never have to be more curious about how we optimize every single square foot in our building, how we use technology to leverage and monetize each square foot and drive profit there,” Green said. “With our data, we’re not only able to ascertain what’s selling [and] where it’s selling, but we’re looking at beacon technology. It makes everywhere in your hotel somewhere that you can buy something.”

In an industry not particularly known for innovating, this can present some challenges. Still, the good news is there are ways to optimize data and make operations more efficient, while also enhancing experiences.

“Are we ready for it on the technology side?” Winey asked. “The phone is the key that controls everything in the room. People want efficiency. We need to look at how we design hotels today to be much more efficient. Hotels will probably mandate that you use a texting service. You want to capture data and habits.”

Easing operational woes may also strengthen company culture, which is still a major concern among leaders as labor remains scarce.

“There’s one reason [hospitality] doesn’t feel as fun as it did pre-pandemic, even though we’re prepared to run through the tape. it’s just that feeling of having to respond and be reactive to employee needs, vendor needs, your delivery times [and] what you can get when you can get it,” Seidel said. “What is my rate going to be? What is the percentage of recourse? It’s constantly reacting to something every minute of every day, and that’s really exhausting.”

Kakarla said he’s “guardingly optimistic” about 2023, feeling like the industry is going from one set of headwinds to some others.

“A year ago, I would have thought that we would have worked through most of it,” he said. “We had inflation and labor pressures and supply chain, and we’ve certainly got through the latter two better than we did a year ago, but inflation is a real headwind, and I don’t think we’ve settled on a clear plan for how to work through it. I do think that as labor becomes more available, we have to focus on reattracting the hourly positions versus the salary positions. It’s starting to get better because of advocacy and education and things we have to do to stabilize hotels.”

Talking about culture is one thing, but acting on it and creating policies to bring it to life is quite another. If the industry doesn’t do this, it may be attracting the wrong kinds of employees.

“Culture is values plus your behavior,” Gollance said. “Focus on your behaviors. Don’t worry about just talking about the culture. It’s important, but it’s your actual behavior.”

Taking care of employees, a group that was forced to operate lean during the pandemic, will in turn take care of your customers, Charles said. This, along with rolling out the proper technology will hopefully ease the exhaustion Seidel referred to.

“Technology and also partnering with the brands as they roll out new technology to make operations more efficient, improving the guest experience and incremental revenue opportunities that we can find are key takeaways,” Charles said. “We were forced to operate with a lot less [during COVID], so what lessons can we take from that experience and continue to implement now? I think customer needs are changing. Let’s try to understand what those are and be more accommodating.”

Although technology is essential, Lizarraga brought up a crucial, yet often overlooked aspect of leadership that can make all the difference: listening.

“Listen to the line level and GMs,” she said. “The way the industry is changing is amazing. The way we did it years ago… We can’t do it that way. You can, but you’re going to have more success if you pivot. You follow them, you listen to them and make changes in technology.”

It all comes back to balance, noted Bennie, who counted that the participants said the word 13 times during the discussion. Yet, the industry seems to be out of sync right now.

“If you think back, we hit a high in 2019 and very quickly hit an extreme low and now we’re back to highs—it’s not just highs in ADR, it’s highs in labor costs, in guest expectations, but we’re still dealing with lows,” he said. “We’re not at a balance—we’re not in balance with owners, brands, debt service [and] operators. We are out of sync and struggling in these areas. We’re working on it and talking about it, but I think as we go into this next year and 2024, we’re going to be going through this rebalancing of what it is we need in this industry, and how we deal with guests, expectations, operations and the cost of making that work.”

Luo is confident the industry can and will make it work, especially with new technologies that increase efficiency and optimize labor.

“We’re committed to using software to facilitate onboarding and training, and if you have folks who aren’t as experienced, they can use and leverage and use the software to learn how to do their jobs better,” Luo said. “I’m really proud of Actabl and rolling out our new mission, which is ‘to empower the people, empower hospitality.’ All 300 people are living and breathing that mission, and we are hoping we can do whatever we can to support this incredible business, this incredible industry.”

Look for more coverage from the roundtable in the January 2023 issue of Hotel Business.