Earlier this month I wrote that hotels need to restore their pre-pandemic service or they’ll never recover. The hotels that do offer guests more will come back faster.
If I can’t get towels in my room at a beach resort, I’m not going. Researching hotels now means learning up front if they’re actually offering housekeeping; whether they answer the phone for requests; what amenities are actually available on property; the extent to which promised cleaning happens, rules like distancing and masking are enforced; and how elite benefits are being honored, if at all.
Hotels cut costs drastically and reduced their breakeven occupancy levels last year.
- 30% for full service hotels, down from 47% in 2019
- 36% for limited-service hotels, down from 43% in 2019
Limited-service properties had less to cut. Most of what’s been cut across the board is labor, with properties no longer maintaining as much staff for housekeeping, restaurants, bars and other amenities.
While late Marriott CEO Arne Sorenson correctly worried that all of these cuts would make recovery more difficult, Hilton’s CEO is hoping to make as many of them permanent as possible.
The work we’re doing right now in every one of our brands is about making them higher-margin businesses and creating more labor efficiencies, particularly in the areas of housekeeping, food and beverage, and other areas. When we get out of the crisis, those businesses will be higher margin and require less labor than they did pre-Covid.
In this context higher margin means lower costs, achieved through having fewer employees on staff at hotels – specifically less housekeeping and food and beverage workers.
At limited service properties, especially Hilton’s limited-service brands, don’t expect daily housekeeping to return.
Meanwhile, food and beverage has been a lucrative area for hotels that they’ve been driving guests towards. They want smaller rooms and more common spaces for guests to congregate. That era seems so far in the rearview mirror. Hotels want the revenue without the cost, but the cost delivers quality product in a timely manner.
Here they’re just driving guests to outside venues and delivery services, while diminishing the difference between what a hotel has to offer and what you can get from Airbnb.