Ben Hom sat at his desk at McKibbon Hospitality’s Tampa corporate office. He waited for his meeting with the Regional Vice President of Operations (RVPO), who oversaw the Tampa market to discuss the 2023 budget for his 10 hotels.
The RVPO feared that staffing shortages and labor costs would wreck his budgets again, as they had in 2022. Hom knew that labor costs were the second most significant variable in the budget, behind revenue, and getting anything close to accurate seemed impossible. Hom understood the RVPO’s frustration and knew similar concerns were echoing across the company. The labor force that the industry had relied upon for decades had evaporated. What worked before Covid-19 was no longer effective. Hom contemplated his options for reliable and lower-cost housekeeping staff and the best solution to this problem.
Hom was Vice President of Human Resources at McKibbon Hospitality, a third-party hotel management company with 100 hotels in eight states encompassing 23 brands and 13 ownership groups (Exhibit 1). The term “Great Resignation” was coined as a systemic labor shortage resulting from resignations from current jobs or not returning to a previous position discarded because of the lower demand due to Covid-19 restrictions. Since Covid-19, hourly labor costs had escalated rapidly and varied drastically across the portfolio. There was an industry-wide labor shortage, especially for Housekeeping. Also, due to the “Great Resignation,” recruiting and retaining quality hourly associates was incredibly competitive. Hom was acutely aware of the problems and had several potential solutions to the staffing challenges.
Raising starting salaries would have aided recruiting but would have reduced profit margins. Foreign workers with H2B visas could have provided needed recruits at the government-defined prevailing wage in each market, typically lower than the market wage. Staffing companies could have been used as needed but included a 30-50% premium cost. Hom also wondered if there was a way to invest in analytics and technology to disrupt the historical labor model. While solving the staffing problem was necessary for his managers, Hom also had to satisfy the goals of McKibbon’s client, the hotel owner, to deliver high-profit margins using data-driven solutions, as this was key to the company’s continued growth.
Authors: William Brezina, Latoya Lemons, Robert Newton, Gregory Pawlowski, Martin Richman
Cite As: Brezina, W., Lemons, L., Newton, R., Pawlowski, G. & Richman, M. (2023). Cleaning up after covid: Hotel staffing during the Great Resignation. Muma Case Review 8(3). 1-28. https://doi.org/10.28945/5227