Optimizing Labor Costs in Hospitality: What GMs Should Focus On

As a general manager controlling costs is one of the fundamental duties for any property. While the last few years have shown marked improvement in the hospitality industry, one issue continues to linger: rising labor costs. For general managers (GMs), the question shouldn’t just be about managing hourly wages but rather about managing the cost of labor per room.

What’s the Difference?

While hourly wages are certainly a factor, focusing solely on them doesn’t give a clear picture of your property’s overall financial health. A more telling metric is the cost of labor per room, which has a direct impact on your operational costs.  Similarly to how a factory would analyze the labor costs for producing a product. In a hotel, rooms are your product, and labor is a significant part of the total cost. One reason why labor costs per room are so crucial is that GMs can pull different levers to manage them, which could even lead to an increase in Average Daily Rate (ADR).

Calculating the Cost to Clean a Room

It’s a fairly simple calculation. Multiply the number of rooms a housekeeper can clean in a day by the hourly wage. Additional employment costs like payroll taxes, recruiting expenses, paid time off (PTO), and benefits should not be ignored.  When factored in, a housekeeper earning $13 per hour may actually cost you $18 per hour – an additional 40% above the wage.

How Many Rooms Can a Room Attendant Clean in a Shift?

This varies by property and brand standards, but many hotels aim for between 13 to 20 rooms per shift. Keep in mind, however, that if the target is set too high, turnover can increase and quality can plummet. This is another hidden cost GMs need to factor into the overall labor equation. High turnover can add an additional 10% to your labor costs, as recruiting and training new staff requires time and resources.  And as your labor costs increase your revenue can suffer as well from lower quality scores.

Managing the Cost of Cleaning a Room

An effective strategy includes balancing full-time employees with temporary or outsourced workers. Utilizing outside labor can often decrease costs per room once all factors are considered.  Additionally, this flexibility allows you to handle peak seasons and high-traffic events more efficiently, making it well worth the investment.

Should You Rely on Inexpensive Contract Labor to Cut Costs?

While using lower-cost staffing options can seem tempting, cutting corners can be costly in the long run. Safety, and insurance concerns must be carefully managed, and staffing agencies without comprehensive management support and a culture of compliance can make mistakes that lead to high employee turnover or fines. This, in turn, impacts productivity and increases overall costs.

The Importance of a Balanced Labor Strategy

At Standout Staffing, we work closely with our clients to develop tailored staffing strategies that help deliver the high-quality services guests expect. By partnering with us, you can ensure your property is well-staffed, compliant, and prepared to meet the demands of a thriving hospitality market.  Contact us today for more information.