While hotels have been able to ride the consumer boom in travel demand over the last few years and maintain revenue growth, things have been a lot tougher further down the P&L.
Energy and staff costs are the two biggies, with the former under a little less pressure than it was in the immediate aftermath of the Pandemic and Russia’s war against Ukraine.
Labour remains an issue however and the people-intensive hospitality industry has had to try and whether the storm with a mixture of incentives and efficiencies. But it is one of those issues that is market and region dependent with each country’s situation different.
Take Japan for example, the country is experiencing a steady population decline with the country's population shrinking by 900,000 last year thanks to a low birthrate.
“It's a combination of paying workers more, getting foreign workers and digital transformation, so having automated checking machines, QR order systems, like limiting the number of employees necessary to run a hotel, right? But in some of the regions of remote regions of Japan, when a part-time worker leaves, it's very hard to replace a person. And one way to do that just by hiring foreign labour," said Shunsuke Yamamoto, managing director of Fortress Investment Group.
“Contrary to like a common perception, it is actually not capped to have foreign workers come to Japan. There's a certain type of visa called the technical trainee, so a 3 year, so like bonded employee cannot change jobs, but we treat them very well. So I Iunia created a training facility near Narita Airport, to do all the legally mandated initial training sessions. And also do a little bit of housekeeping training and all that before they go to the hotels. This has worked very well and hopefully once the 3 years are up, some of these foreigners become permanent employees under different visas.”
China has a different set of circumstances,
“China with the population, 1.4 billion, there's no shortage of labour, particularly in mainland China. There are certain markets that are challenging, Hong Kong, Macau, in particular, but in terms of mainland China our biggest challenge is ... that increase in labour costs continues to grow, how we become more efficient in hotels and there currently is, you know, big shift or wave using technology, using different solutions to try and at least hold labour costs," Daniel Aylmer, CEO, Greater China at IHG said.
He added: “If you're looking at rev par, rev par's pretty flat and, and most likely looking at next year we'll follow a similar trend. So what is key is how we're protecting those bottom lines. It's really about efficiencies, it is about how you can use technology to at least maintain the current costs as labour continues to rise.”