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Opinion: Pent-up travels tweaking hospitality strategies

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No other industry was hit harder by COVID-19 than the hospitality industry. From large corporate hotel properties to small independent restaurants, all segments experienced high levels of uncertainty at some point in time.

The good news is the industry appears to be rebounding as more people get vaccinated, and they feel comfortable eating out and traveling again.

The pent-up demand for travel is both exciting and challenging for the industry. Hotel, restaurant and attraction operators are thrilled to see guests in their establishments once again. Those of us associated with the industry thrive on connecting with people. Let’s face it. The hospitality industry is people-centric. It relies on people as guests and people to provide the services demanded by guests.

With customers returning, the most pressing issue for the hospitality industry is labor. In fact, the American Hotel Lodging Association has signaled that the industry is in an acute labor shortage. Locally, I can certainly attest to the realities of this shortage. Since early April, my office on the campus of Missouri State University has been flooded with calls from employers seeking to hire our students.

The reality is the industry is now forced to do more with less people. Expect to see an increased reliance on technology and strategies to offset the impact of labor shortages, reduce expenses and drive revenues. Technology will not solve labor concerns, but it can ease some gaps.

My advice to operators is to treat your current employees like gold. Then, thoroughly survey your operations and consider ways technology or system adjustments might reduce your customer service pain points.

Each industry segment can potentially use technology to address labor. For example, hotels may be able to reduce the demand placed on front-desk employees by incentivizing guests to use mobile apps for check-in and digital keys. Restaurants could shift to at-the-table ordering apps to address service staff shortages. Attractions might direct customers to online ticketing options to keep a steady flow of guest purchases.

The demand for labor coupled with the limited labor supply will increase the wages paid to all levels of employees. Hospitality is a labor-intensive industry, which means all other operational expenses must be minimized. COVID-19 forced hospitality operations to scrutinize every line-item expense. The focus on operational expenses must continue to adjust for increased labor costs.

Managing revenue also will be important. Expect to see heightened focus on revenue management strategies across the industry. Revenue management is prevalent in the airline and hotel industries. The practice is not as common in the restaurant industry. However, by using digital platforms, it could be.

Menu prices in the restaurant industry tend to remain unchanged for longer periods because of the expense and time associated with printing menus. COVID-19, however, shifted many restaurants to online-only menus or digital menu boards. On a recent trip to Dallas, I dined out at six full-service restaurants. Not a single restaurant had a printed menu. Instead, customers scanned a QR code on the table with their phone to view the menu.

The digitization of menus makes it easier for restaurateurs to implement revenue management strategies. If a sudden spike in food costs occurs or a peak event is anticipated, digital menus allow restaurateurs to adjust their pricing weekly, or even daily, as opposed to quarterly, semiannually or annually. To be effective, revenue management requires time and close attention to data. Of course, managing and meeting customer pricing expectations is key. Repeat customers may be turned off by the practice if price adjustments are severe.

To be clear, technology will not replace the human aspects we appreciate in the industry. However, if it can be used to ease some of the current labor issues, then it is worth considering.

My final thought for those of us who are visiting hospitality establishments once again is to be kind, courteous and patient. The individuals who work in these establishments just lived through the worst year the hospitality industry has ever experienced. They worked hard to keep their businesses going. A little understanding of the new challenge they face will go a long way.

Stephanie Hein, who holds a doctorate in education and an MBA, is the department head of hospitality leadership at Missouri State University. She can be reached at stephaniehein@missouristate.edu.

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