National Report–In the fall of 2009 three Boston-area Hyatts laid off nearly 100 housekeeping employees and replaced them with lower-paid staff from an outsourcing agency. When news hit the press the outrage was immediate. Although the laid-off housekeepers did not belong to a union, the local Unite Here pro-union group took on their case and even the governor of Massachusetts urged a boycott of the hotel chain.
In fact, unions are a major reason established hotels in union markets don’t or can’t outsource tasks like housekeeping. An executive with over 20 years experience in the hotel industry who chose to remain anonymous told Hotel & Motel Management that eliminating a union position is nearly impossible without a big legal headache.
“We’ve seen a number of hotels look at this option early on, particularly either if they’re being redeveloped or newly constructed,” he said. “It’s properties that are not unionized, but are looking to streamline the onsite management process and also take advantage of some efficiencies and other opportunities that come, particularly for multiunit operators.”
Sean Hennessey, CEO of Lodging Advisors noted that years ago, it was believed you couldn’t outsource the reservations function, and hotels were built with an entire floor of people who opened up envelopes and took out reservation forms and checks. “Now that’s completely gone offsite. There’s a lot of areas where it makes sense for a hotel to examine any and all options about how they can make it better,” he said.
Saving money is the No. 1 reason most owners and managers would consider outsourcing housekeeping. Our anonymous source said that he has seen a more than 25-percent decrease in labor costs in the hotels where housekeeping was outsourced.
“It’s not just a direct reduction in labor cost, but in New York City especially, there’s also the benefits and related expenses associated with these staff persons. In some cases the payroll taxes and benefits might cost another 40 percent on top of a person’s salary,” he said.
The housekeeping department also usually has the highest turnover rate at a property. Outsourcing the staff helps reduce not just the direct wages and benefits, but also the recruiting and training costs. Most staffing companies work by contract and offer a fixed monthly cost, so there are no fluctuations month to month.
Outsourcing a department like housekeeping also lets management focus on guest services and marketing. While guests see the end results of a housekeeper’s work, they don’t interact with guests the way a front desk clerk or waitress might.
And bringing in outside staffing isn’t always a bad thing for remaining hotel staff or the outside company’s staff.
Elizabeth Linares is the executive housekeeper at the Holiday Inn Miami Beach and she uses the outside staffing company as a temporary agency. “I think it’s the fastest solution when we have an emergency,” she said. “Especially in Florida, our demand depends on the weather. If a hurricane comes, we don’t need as many people, but other times the hotel is full for weeks.”
Linares also says it gives the staffing company’s employees a chance to work full time if they wish, which she wouldn’t be able to offer direct employees.
Employees at The Services Companies, a provider of outsourcing services, are offered health benefits, retirement options and other benefits according to Steve Wilson, SVP and GM of the outsourcing-services provider. “Employee morale in the back of the house transfers to the customer experience in the front of the house,” Wilson said.
“One question we get a lot from GMs is how to ensure that the hotel’s service, employee-focused culture remains,” he said. “We incorporate company-specific or property-specific brand standards into our training.”
He said the company assists or provides full training to new employees and doesn’t consider itself a temp agency. “In some cases the property will keep the department head, and we will provide all the associates, including a training manager or staff liaison who works hand in hand with the property’s department head.”