Hotel Owners Look To Cut Amenities While Brands Want Them Restored

LOS ANGELES — “Amenity creep” was a real problem for the hotel industry pre-pandemic, but the past two years have given hoteliers the opportunity to reset their operating model and make some cuts, according to industry executives.

Speaking at the “Boardroom Outlook: Leadership — Understanding the ‘Hot Potato’ Issues” panel at the 2022 Americas Lodging Investment Summit, Ashford Hospitality Trust President and CEO Rob Hays said things like executive lounges must be scaled back to combat labor shortages and increasing costs.

“That’s something brands were pushing hard from the loyalty side, and I think this has given us the ability to kind of rethink some of those amenity creep issues,” he said.

Speaking from the brand side of the equation, Extended Stay America Chief Operating Officer Greg Juceam said it’s important to use this moment to reset.

“We have to ask ourselves not just ‘What do the guests actually need?’ but equally ‘What are they willing to pay for?'” he said.

At the same time, Juceam said some of the prediction of permanent changes to the industry have been a bit exaggerated.

“All of us read a year or two years ago the thousands of articles about how the buffet is going to die, and you’re never going to see the buffet in a hotel again,” he said. “But think about that as you’re eating your buffet breakfast tomorrow.”

Ray Bhai, CEO and chairman of IBF Hospitality, said the scaled-back operating model has been particularly important at full-service properties, which require more labor and where demand has been typically lower than at leisure-driven, select-service hotels.

Some of those service changes might be permanent to protect profitability at some properties, but there is already resistance from brands, Bhai said.

“We’re seeing from the brands that they are pushing to try to take things back to normal. It’s a work in progress, and will depend market by market where the demand is and what the situation is,” he said.

The level of service hotels are able to provide will continue to be an issue, driven largely by persistent staffing shortages, panelists said.

“We see that the Great Resignation is real. It’s very real,” Hays said. “And the tipping point for someone to leave the job is very, very low. I think what we’ve had to do is the same way that you’re looking at trying to please your customer and your guest, we’ve had to begin to create that intentionality on the employee side.”

The issue varies by market, with staffing particularly difficult in large markets because it’s hard to adjust staffing levels as demand fluctuates, he said. In some resort markets, where leisure guest demand is very high, providing service at the levels expected is next to impossible, he said.

“In Key West, it’s impossible to staff these hotels,” Hays said.

Juceam said labor issues can also be hugely debilitating at smaller properties, especially if multiple staff members leave at once.

“When you have five, six, seven, eight people running a hotel, if you lose four of them, that’s a long day at a hotel. … It’s a real thing where some hotels have to reduce the number of rooms they sell or stop selling to make it through the day,” he said.

The level of employees that hotels have had to hire is impacting service levels as well, Juceam said.

“With the scarcity of the labor, it really makes you have to decide: Are you going to hire someone that isn’t maybe up to your standard?” Juceam said.

Bhai agreed, adding that hotels in the past employed “A talent” are now employing “B talent” and correspondingly “B talent” has gone down to “C.”

“This is going to be an issue, I’d say, for another two or three years because once you get back to 100% [staffing], you still don’t have the correct talent that you had prior to all of this mess happening,” he said.