High labor costs have been well reported in the industry. It’s an important metric for any hospitality leader. But for a hotel it may be only one part of a larger picture. Determining the cost of labor per room can be a more useful metric to maximize revenue per available room and reducing your overall risk to profitability.
Isn’t that the same number?
Certainly, hourly rates are related to the cost of labor per room, but they are not as useful in determining your property’s economic outlook as other metrics. The cost of labor per room has a significant impact on production costs. A factory producing widgets would be interested in knowing how much labor it costs to produce a widget on top of the costs of the materials used in its production. Hotel rooms are similar to widgets in that they are the product that is being purchased—labor is only a portion of the total cost of the product. One of the reasons why labor costs to clean are important is that you can control those costs by pulling different levers and ultimately looking at raising average daily rate as a result of doing so.
How do you determine the cost to clean a room?
The formula is fairly easy. Simply multiply the total number of rooms a housekeeper can clean in a day by your hourly rate. Just remember to factor in other employment costs such as payroll taxes, recruiting costs, paid time off and benefits. This can typically add an additional 30 to 40 percent to an hourly rate, meaning a housekeeper earning $13 per hour would need to be calculated at an actual cost of $18 per hour.
How many rooms can a housekeeper clean?
This number can vary. Some hotels set a benchmark of 13 rooms per shift, while others set a target of 18 or 20 rooms. It’s worth noting that if this figure is too high, turnover increases. Also, keep in mind that turnover should be included in the employment figure. This could easily be adding another 2 to 5 percent to your hourly labor costs.
How can I control my cost to clean a room?
Including both full-time and contract workers in the cleaning costs is essential. As a general rule, adding contingent labor does not significantly increase the cost per room. Contract workers can cost as little as an additional 30 cents per room, and if that means more rooms can be cleaned during peak seasons or busy events, that is money well spent.
Will inexpensive contract labor save on labor costs?
Be wary of cutting corners on staffing in order to reduce labor costs. When compliance, safety and insurance are carefully considered, these solutions may have hidden costs. Some staffing agencies that do not have rigorous back-office billing support may make mistakes that result in increased employee turnover, which has an impact on production.
Hotel staffing challenges predated the pandemic and will continue. In order to grow, hotel leaders must have a nuanced labor strategy. While there is a cost to hiring labor, there is an even higher cost to not hiring enough labor. Putting the best foot forward becomes necessary for a property’s overall reputation, brand, image and long-term viability.
James Krouse is SVP, sales and marketing, for Hospitality Staffing Solutions.