Hospitality has always hinged on one simple promise: take care of the guest. As any hotel operator knows, however, it’s not always that simple.
Providing a quick and easy check-in experience, acquiescing to room preferences and catering to their every whim once guests are in the room has long been the industry standard. Or, at least, the industry standard goal.
But that standard is becoming harder and harder to hit thanks, in large part, to labor challenges.
“Labor remains the highest expense on the P&L (profits and loss statement), with key roles like housekeeping and front desk experiencing persistent turnover,” notes Raheel Moolji, director of investment sales at Greysteel, a middle-market focused real estate investment banking firm.
Staffing shortages remain widespread, with hotels across the country struggling to fill key frontline roles. In major markets, rising wages and evolving labor regulations are pushing payroll costs higher. Minimum wage in Washington, D.C., for example, is $17.50 an hour. It’s at or above $16.50 an hour in Washington State, New York and California – but labor costs are up nationwide.
The combined costs of hospitality worker salaries, wages and employee benefits increased by 4.8 per cent last year, according to CBRE’s latest hospitality intelligence investment report. At the same time, the firm notes that the number of hours employees logged at the average hotel was down 7.4 per cent.
“Hotels are paying more for fewer hours worked, which is indicative of the struggle operators have had to fill open positions, as well as cuts in the services and amenities hotels offer to guests,” the report states.
Unfortunately, all of this is occurring at a very inopportune time for the service industry.
“While we continuously seek greater efficiency to protect NOI, guest expectations for service remain high, especially as rates continue to rise,” Moolji adds.
With guest expectations higher than ever, cutting services and/or amenities isn’t a palatable strategy for many hotels. And it doesn’t have to be.
Tech as the new team member
Savvy operators are leaning on automation and other tech models to address rising costs, worker shortages and customer service.
“By integrating tech tools, hotels can maintain seamless service while prioritizing personalized guest experiences where they matter most,” Moolji says.
Mike Gray, global vice president of strategic partnerships at internet connectivity and network management solutions provider Nomadix, notes AI (artificial intelligence) can automate many back-of-house tasks, including reporting, revenue yield, occupancy forecasts and the like.
Then there’s the customer service pain points.
“Check-in remains the biggest bottleneck for hotels,” says Branigan Mulcahy, co-founder of Virdee, a straight-to-room guest-experience platform. “These tasks are repetitive and labour-intensive.”
Mulcahy’s research shows hotels spend an average of $9 to $10 per check-in on front desk labour alone.
“These tasks can now be obsolete due to the power of technology,” he continues. “Operators are urgently rethinking these touchpoints due to a combination of rising labour costs, staffing shortages and the fact that guests don’t have patience for lines.”
One of the most widely adopted responses to these challenges is mobile check-in, which is commonly paired with mobile keys.
“Mobile keys are among the most popular and well-known solutions because it mirrors consumer preferences for personal, smart device-enabled self-service,” says George Winker, vice president of sales for North America at Vingcard, an advanced technologies provider for the hospitality industry. “And it avoids the need to wait in line at the front desk.”
Automated service platforms like Virdee’s typically address the three main tasks associated with check-in: identity verification, payment submission and key issuance. Guests can complete their check-in process from the web, their mobile device or a lobby kiosk.
Mulcahy reports that hotels utilizing Virdee often report a 30 per cent to 50 per cent reduction in average check-in time. It has also resulted in a measurable boost in guest satisfaction scores of up to 23 per cent, particularly among business travelers and digital-native guests.
“One brand saw its app store rating increase by a full point after rolling out mobile check-in with us,” he adds. “All of these results show that automating the guest journey isn't just a nice-to-have. It's a strategic lever for profitability.”
The Rio Hotel & Casino in Las Vegas achieves more than 50 per cent check-in conversion with Virdee on its busiest days, while extended-stay brand LivAway Suites has been able to remove its nightshifts altogether.
“Virdee processes 100 per cent of check-ins,” Mulcahy continues. “As a result, they’ve saved one to two heads per property. Nightshifts are also notoriously hard to staff reliably, so LivAway also benefits from reduced staff churn.”
Anneliese Vance-Sherman, Chief Labor Economist for the Washington Employment Security Department, notes that schedule adjustments have become a common strategy among hotel employers facing rising wages in the state. Altering service offerings (providing room service or housekeeping by request, for example) and automating tasks have been as well.
“Rising wages have posed challenges to businesses,” she says. “Part of the motivation – especially in industries for which labour is one of the largest and most variable costs – is cost cutting through staffing reductions. Technological substitution makes this possible to a certain extent, but through the transformation of jobs by eliminating or changing tasks.”
Tech as a partner in time
Innovative tools may allow hotels to do more with less, but they still pose a challenge – striking the right balance. Guest expectations dictate that hotels must deliver service that still feels personal, without the full headcount that once made it possible.
For investors, understanding how that balance plays out on the ground is tantamount when evaluating risk, efficiency and long-term asset performance. In many cases, the solution lies in streamlining operations – not only through the integration of technology, but by redistributing and reutilizing staff.
“Ongoing staffing challenges have driven hotels to adopt leaner operating models and invest in cross-training associates, ensuring teams can work efficiently across multiple roles,” Moolji says.
Technology can then fill in the gaps – and it’s doing so in more areas than just check-in. Access management software can play a vital role in streamlining hotel operations by automatically assigning available guestrooms.
“The technology can integrate with housekeeping management systems to ensure that a room has been cleaned and is ready for the next guest without requiring manual verification,” Winker adds.
He notes that automated security alerts and door lock battery checks have also become standard, but the biggest gamechanger is real-time room occupancy detection. This technology eliminates the need for staff to manually adjust thermostats or lights in vacant rooms, unlocking a new level of operational efficiency.
Mobile apps, in-room tablets and chatbots that allow guests to order food, request housekeeping, or ask for essentials like towels and toiletries further lighten the load.
“By reducing phone calls and streamlining service requests, automation ensures swift, accurate delivery,” Moolji says. “These innovations help hotels enhance efficiency while maintaining service quality. Research indicates that overall guest satisfaction has risen by 20 per cent, thanks to the enhanced experiences enabled by automation.”
This satisfaction can further improve when tech provides opportunities for customization and personalization. Integrated access and energy management systems, for example, can automatically adjust in-room settings according to the preferences listed in a guest’s profile.
Smart technologies and room sensors can also result in additional savings via energy efficiency.
“Managing energy use from the cloud using real-time conditions and information not only provides a comfortable environment for the guest but allows operators to better control idol room heating and cooling for greater cost savings,” Gray says.
Those savings should go, in part, to supporting the asset’s human workforce, argues Enrique Lopezlira, director of the Low-Wage Work Program at the UC Berkeley Labor Center. He believes phasing out actual staff can post strategic risks for the hospitality industry.
“The hotel industry’s increasing reliance on automation…raises serious concerns about job security, working conditions and the long-term erosion of labour standards in the hospitality sector,” he says. “Hotels may find themselves grappling with reduced service quality, a weaker workforce, and public and regulatory backlash. Long-term success in hospitality depends not just on cutting costs, but on maintaining high-quality service, strong staff morale and a sustainable employment model.”
Vance-Sherman also cautions operators against assuming that technology can – or should – fully replace human labour.
“In general, technology adoption doesn’t replace entire jobs,” she says. “It has the effect of transforming the nature of jobs, and can eliminate or reduce the time intensity or labour of certain tasks, but it doesn’t replace jobs in a one-to-one way.”
Mulcahy adds that even a system like Virdee, which can take employees completely out of the equation, is meant to assist the physical labour force, not render it obsolete.
“Many of our clients say their motivation isn’t to reduce headcount, but to reallocate staff to higher-value roles while letting technology handle the mundane transactions,” he says. “Hospitality leaders now view automation not just as a cost-saving initiative but as a necessity to boost guest satisfaction and prevent staff burnout.”
Moolji notes that technology can also help inform staffing decisions. Once mobile apps and check-in kiosks gain enough traction to generate meaningful data, operators can use AI-driven predictive analytics to better anticipate staffing needs.
Putting it all together
Utilizing technology in a way that benefits guests, operators and hotel staff is entirely possible…as long as the tool delivers in a meaningful way. For Gray, this comes down to three things.
“Each of these applications has to stand on their own merits for guest ease of use, functionality and cost benefits,” he says.
He also notes that applications need to “talk to each other” to optimize automation. Most automated technologies do this over Wi-Fi, which makes reliable access imperative. At the same time, however, these systems must remain segmented to ensure security across the network.
“It’s critical for the hotel to have a robust and secure network to accommodate the increasing usage, bandwidth and automation in a secure manner,” Gray continues.
Operators can avoid compatibility issues by choosing a single vendor offering an integrated suite of products. Utilizing the cloud also maximizes efficiency as it allows multiple eyes to see and control various applications, sometimes throughout various properties.
The numerous updates associated with technology also makes flexibility key when choosing a tech solution.
“Upgrading to new access technology often meant having to overhaul and replace existing door lock hardware, while deploying an increasingly complex patchwork of systems to adopt additional functionalities or services like mobile app integration, dual-use keycards, etcetera,” Winker says. “Hoteliers can avoid increased expenses and unforeseen issues by working with providers that take a modular, open-ended approach to their solutions.”
For example, individual door lock components should be swappable in case the property decides to enable mobile keys, update security protections or adopt other new abilities as technology improves. Speaking of mobile keys, experts seem to agree on which ones reign supreme.
“Apple and Google Wallet room keys are the future,” Mulcahy adds. “The user experience is significantly better than the app-based digital keys that utilize Bluetooth Low-Energy (BLE).”
That’s because Wallet keys allow the guest to simply tap their phone to the room’s lock without any additional steps. With the older BLE keys, the guest needs to unlock their phone, find the hotel’s app, find the digital key and then click to activate the digital key before using.
“Every hotel on the planet should be investing in the lock technology required to support Apple and Google Wallet room keys,” he continues. “In addition to removing tons of plastic waste every day, the digital option is safer and more secure.”
And every hotel should be investing in its human workforce to ensure the duo can maximize efficiency while keeping costs low and guests happy.
“Once a client has committed to changing the operating model to a staff-plus-technology approach, it opens the door to a revolutionized guest and staff experience,” Mulcahy says. “Staff and technology are meant to work together, not compete with each other.”