A warm smile at check in. A cozily made bed. A laugh with the bartender in the hotel bar. For all its complexities, the hospitality business is and always has been a people business. Keeping hotels staffed with individuals who combine technical skills and a deep understanding of the essence of hospitality is an ongoing challenge for every operator — and it isn’t getting any easier.
Deloitte’s 2016 Travel and Hospitality Industry Outlook cites recruiting and retaining the right people as one of the four biggest challenges facing the tourism and hospitality industry this year. The report identifies the industry’s increasingly specialized jobs, as well as options for better pay outside of this industry, as key factors contributing to this problem. It also calls out an existing perception that the tourism and hospitality industry does not offer “abundant long-term career prospects” causing high turnover rates.
In the midst of corporate consolidation, industry fragmentation and new competition for talent, hotels must overcome outdated perceptions and antiquated practices in order to attract and retain employees who can effectively deliver on the promises hotels make to guests.
CORPORATE CONSOLIDATION
“It’s a very odd time in the Canadian hotel world,” says Brent Billings, executive recruitment consultant at Lecours Wolfson, a leading recruiter of foodservice, hospitality and retail executives, managers and chefs across North America. “We haven’t seen this level of brand consolidation in our history…a landscape that had multiple players is now becoming incredibly centralized and consolidated.”
In just the last two years Marriott and AccorHotels have solidified their dominance over the Canadian market through major acquisitions. In 2015, Marriott International Inc. acquired the Delta Hotels brand — including 38 hotels in 30 Canadian cities — from British Columbia Investment Management Corporation for $168 million. Now, Marriott is poised to further expand its portfolio with its $12.4 billion acquisition of Starwood Hotels and Resorts Worldwide — a transaction which will effectively create the world’s largest hotel company.
AccorHotels — a global behemoth with more than 3,800 properties in 94 countries and 20 luxury, mid-scale and economy brands — acquired Fairmont Hotels & Resorts, Raffles Hotels & Resorts and Swissôtel Hotels & Resorts in a deal that was announced in December 2015 and finalized in July of this year.
“[This consolidation] has a huge impact on what we do…Marriott and AccorHotels have a stranglehold on the market, both in terms of the percentage of the hotel rooms that they own, but also the talent,” says Billings. “Even Hyatt, which is a huge international hotel company, only has six hotels in Canada. Now they are facing off against a Marriott that’s going to have 90. The playing field is dramatically different. What I would always try to do as a recruiter is dangle career growth, compensation, brand; now I can’t do that, because the reality is if you’re working for the Marriott/Delta/Starwood configuration, you’re not going to move.”
INDUSTRY FRAGMENTATION
While the Canadian hospitality industry is undergoing unprecedented consolidation, it is also becoming more fragmented in the sense that it is not unusual for one corporate entity to own and manage the brand, while another owns the building and facilities, another manages operations and perhaps another operates the onsite restaurant.
“There are less opportunities in the mid-market hotels, in that they don’t have the food-and-beverage [component],” acknowledges Trevor Hagel, VP Operations with Travelodge Canada. “If there are under 100 guestrooms, [all you really need are] front-desk clerks, housekeeping and a manager.”
As corporations become more narrowly focused, their ability to entice prospective employees — particularly at the manager-level and above — with competitive salaries and “elevator” programs offering ongoing training and advancement is drastically reduced.
Competition from outside industries The transferrable skills earned by working in the hospitality business are becoming more highly valued by corporations outside the hotel industry and this new competition for talent is adding significant pressure.
“The transferability and attractiveness of a hospitality candidate has never been as high,” says Billings. “Some of the major retirement companies are now being led, at an executive level, by ex-hoteliers.” These executives have a keen appreciation for just how easily skills learned in the hospitality industry transfer to the retirement industry.
“This is the first time that I’ve ever seen the retirement industry — which is exploding — exploit the hotel world like this,” he adds. “Our firm is doing a ton of retirement work, where 10 years ago we did none.”
Hagel agrees with Billings analysis of this trend, noting it’s one that appeared quite suddenly. “The retirement industry, about five years ago, started recruiting lightly,” he says. “Now they are doing it a lot more. They are coming after hotel general managers to run retirement homes now, whereas in the past they didn’t use us as a resource.”
Hospitality’s reputation as a “sweat equity” business that demands working long hours over evenings, weekends and holidays without big financial rewards only increases the leverage enjoyed by competitors.
CHANGING ATTITUDES AND EXPECTATIONS
Last but not least, attitudes and expectations of prospective employees are also changing. Some of this can be chalked up to the uniqueness of millennials, but larger trends are also at work.
“Hotels used to rely on the fact that hoteliers were prone to wanderlust,’ says Billings. “In the last 20 years, a bunch of socio-economic factors have eliminated the propensity for people to relocate. Statistically, less than two per cent of candidates describe themselves as relocatable, down almost eight per cent from five years ago.”
Widely disparate costs of living in Canada’s major markets play a significant role in this shift. Moving from Ottawa or Edmonton to Toronto or Vancouver is often prohibitively expensive. Furthermore, the percentage of dual-income families in Canada has almost doubled in the past 40 years according to Statistics Canada — up from 36 to 69 per cent.
“When I started working for Fairmont in 1995, the entire executive committee of the Fairmont Jasper Park Lodge [were from] single-income families,” says Billings. Today, despite the opportunities relocation can offer, employees must also consider the impact on their spouse’s career. “Relocation was really the hallmark of the hotel business and that’s just stopped,” Billings concludes.
On top of this new aversion to relocation, employees are less likely to stay with one company for the long haul. Workopolis research suggests that from 2000 to 2014, 51 per cent of Canadians across industries stayed in the same job for less than two years while only 30 per cent kept the same job for more than four years — a dramatic change from 1990 to 2000, when 55 to 60 per cent stayed for more than four years and just 16 per cent of people stayed in a job for less than two years.
“Our goal is two years,” says Justin Schinkel, CEO of The Inn Keepers, a family owned and operated hotel company based in Steinbach, Man. The company operates the Days Inn Steinbach, Quality Inn Winkler, Super 8 Winnipeg East and Motel 6 in Headingley. “We always pay over industry average to reduce turnover and make it harder to poach from us. Sometimes you know it will only be four months or six months, but two years is our goal and we often exceed that.”
Though not keen on calling out millennials, Hagel notes it’s especially hard for mid-market hotels to recruit this group. “They want to come in and become a general manager right away and they expect to be [the kind of] GM that stands in the lobby and shakes hands with all the guests that walk in and says ‘thank you for staying with us’,” he explains. “Whereas general managers in mid-market are all hands- on — they are pulling desk shifts and are a lot more involved.”
PUT PEOPLE FIRST
According to Schinkel, one of the best ways to overcome challenges is decidedly low-tech but effective — get to know your employees. “There tend to be three waves of turnover per year,” he says. “The biggest one is in September when people go back to university.”
He also calls out the holiday season and the spring — when college and high-school students finish their year — as times when turnover peaks. “It’s almost like clockwork,” he explains. “If you don’t talk to your staff you won’t know they’re graduating. So building relationships with the staff allows you to better forecast your HR needs.”
However, this does little to address the challenge of attaining people in the first place. “We have more jobs than we have qualified candidates for,” laments Billings. “What are we going to do to draw people into our industry? We’ve never looked at [people from other industries such as airlines and car rental] and said ‘Hey come work at our hotel.’ We’re going to have to open ourselves up to that, because the cyclical nature of the hotel world will create supply and demand that we can’t meet.” Hoteliers must consider how their flare for making guests feel comfortable and valued can be applied to improving their own reputations as employers and enticing talented people to enter the industry and stay a while.
“What are the priorities?” Hagel muses. “Are [they] your guests or your employees? Everyone has their own opinion as to what should be the priority, but I believe that if you treat your employees right, they will treat your guests right,” he explains. “If you have a good, solid team working for you, you’ll reap the rewards from that.”
Written By: Sarah Maclean
Volume 28, Number 6
