Crowe partner, Aiden Murphy shares some insights from a CEO debate at the IHF Investment Conference in May 2019. Taking part was: Pat McCann of Dalata, Michael Vaughan, owner of Vaughan’s Lodge, Co Clare, Sean O’Driscoll, Chief Operating Officer of iNua Hotels and Mark Rochford, General Manager of Ashford Castle.
Staffing issues were upmost in the thoughts of these hoteliers.
The pressure to attract and retain staff with appropriate skills and service levels is a major challenge for hotels in this tight labour market.
There was a concern that a shortage in rental properties available for staff was creating additional challenges in attracting staff. The prevalence of Airbnb taking stock out of the area for short lets was cited as a problem with finding long-term rental properties for staff.
Ensuring that hotels have training and development programmes and a career framework in place to enable staff to progress to manager level, expand their responsibilities and further their career is seen as critical for staff retention. Larger entities, such as Dalata, with formalised programmes and a certain scale, do not have the same issues with resourcing. For their recent Dublin hotels expansion and new openings, Dalata have benefited from a scale of operations that enabled them to move staff between properties and development programmes that has enabled them to fill manager positions through internal channels.
There is also a recognition by hoteliers that personal time is valued by staff and that management need to offer part-time and flexible working hours. Some regional properties may need to look at more flexible working arrangements and adjusting opening nights for restaurants to ensure continuity and consistency of service. For example, some restaurants may need to close on Sunday or Monday nights when demand is lowest.
The rising cost of insurance premiums and the pressure from increased claims by either staff or guests for incidents was also a key concern for hoteliers.
Participants in the CEO discussion believe effective claim management is crucial. The reported incident needs to be carefully documented and a proper process put in place to escalate the issue with evidence detailed, so as to avoid any challenge should the case need to be defended. Hotels are seeing more and more time from the general manager being spent dealing with insurance claims which is a further hidden cost.
Managing new hotel room supply
When it comes to managing new hotel room supply, the hoteliers were concerned that any new capacity is delivered in response to an established shortage.
For regional areas, such as Cork, further attractions should be developed to ensure further demand is generated and new markets opened up to feed any new capacity.
The hoteliers also stressed the importance of maintaining minimum standards in the hotel product. It was felt that hostel-style hotels, which offer a cheaper but lower standard product, should not allowed to be labelled as hotels.
The hoteliers raised concerns that current funding availability did not support family-owned hotels in areas where demand was seasonal.
It was felt a state-supported provider of longer-term subsidised borrowings would support these regional hotel owners by providing a repayment horizon long enough to allow them to invest and grow the business as well as to repay the loans. This assistance would also encourage the next generation into the business to continue the legacy of these family hotels.
There was a deep concern amongst the panel as to what Brexit could mean for reduced business levels, but equally a view that whatever contingency plans are put in place, without knowing what the shape of Brexit is, could be a ‘waste of money’.
The more general strategy of having a good balance between domestic, international and corporate and leisure segments was seen as the optimum way to position the business to withstand any shock posed by a weakening of sterling and a lower number of UK visitors to Ireland.
The green agenda
Being environmentally responsible is seen as important for hotels both in meeting guest expectations and in meeting the requirements of investor funds.
Hotels are now focused on being able to achieve green credentials by meeting targets for being plastic free, landfill free, having all lights changed to low energy devices, etc.
New hotels being built were up to 70% more efficient in energy usage and this was a major efficiency for groups expanding through new build properties. Existing hotels remain focused on ensuring pumps are running only as required, that building management systems are in place to control energy use in the property and to minimise waste.
Hotels are also encouraging staff to attend innovation meetings to discuss, suggest and share ways for hotels to save energy and reduce waste.