#3 – Not preparing for the “Next” wave of the Labour Shortage

I have been talking about our current labour situation and how 5 years ago you were setting sales records and scrambling for staff as we headed in to the boom and now as most of you are doing the same sales as you were then you are talking about how tough business is and all of the great candidates out on the market.  Perception is STRANGE!  In one circumstance you were scrambling to find people and now you are holding off on hiring (but not worried about finding people).

It is coming – the labour crunch that is!  I have said it before and I’ll say it again, pre-boom unemployment was 7.8% (in 2004) and now…7.9% .  That is a whopping .1% difference.  I have challenged people to go back and check their sales and compare present day to 2004/2005 and see if there is any difference. 

The reality is that as Manufacturing and Oil & Gas pick up all of your “loyal” staff will be picking up their gear and heading out to make the perceived “big bucks.” In 2007 high school drop-out rates were the highest they have ever been and post secondary enrollment was the lowest it has ever been – people were dropping out to go out in to the work force to make $! And statistically the 18-25 age demographic is SHRINKING – yep, shrinking.  Our population is aging and nearly half of the people in Canada are headed for retirement and there are far less of the “younger generation” to fill the vacant spots left by those who are retiring.

Here is a prediction.  In the next 12-18 months you WILL be scrambling for staff.  Unemployment will be at or under 7% and business will booming (not to the levels seen in 2007 but pretty respectable).  If oil gets over $80/barrel people will be migrating to the prairies in droves.  If manufacturing picks up in Ontario people will be lining up.  We in the Canadian Hospitality don’t do a great job at keeping our people happy or paying them what they deserve which leaves the door open for them to leave to find better opportunities.  Unfortunately we are a “feeder” industry!  People come to us when they need some quick cash and as soon as something better comes along – they’re gone.

So I challenge you to do a better job with your people and work to make our industry one of pride, prestige and recognition.  Lets make our professional feel proud to be a part of our industry and most importantly lets start changing the “rules” we have defined and start treating our employees they way they deserve to be treated.

I want to hear from you on this topic.  Are you frustrated with your current situation?  What would you change if you had the power to do so?

I want your comments and would love to start a conversation.  Please leave your comments and forward this article to anyone you think might appreciate it.

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We always welcome article from our readers and today I am happy to post and article from Mike Walmsley of Cobalt Hospitality Consulting.

Current and Future Prospects in the Hospitality Industry

The seasonality of the hospitality industry does create challenges that are somewhat unique to the industry. The important question is: What the industry is doing over the long run rather than just season to season?

Some numbers might help; in 2009 the tourism industry in BC was worth almost 10 billion to the provincial economy. That equals wages for a significant number of people in BC!   Recent reports from the BC Tourism, Culture and Arts Minister Kevin Kruger wants to see the industry in BC expand to $19.6 billion by 2015.  Interestingly enough as a comparative New Zealand’s tourism contributes about $25 billion annually to their economy. Whereas Kruger’s number might be a little optimistic there is no doubt that hospitality and tourism will continue to grow in BC and indeed nationally.   Hospitality companies know this, look at the growth we have seen in Vancouver in the last year, the opening of two new high end hotels in the downtown core, renovations and upgrades to others.  The opening of one of the newest LEED convention centres in the world hit the market late last year which just happens to be in Vancouver as well.  If you think these properties “just opened for the Olympics” think again.  These new hotels and facilities where built because the stakeholders see real potential in our expanding market.  This translates into more jobs for the city and region.

Here’s a look at numbers from the accommodations side.  Statistics around room rates and occupancy are often used as a measure of success in the industry and here’s what’s been happening this summer.  The occupancy in Vancouver hotels has been the highest in all of Canada’s three major markets; Vancouver, Toronto and Montreal. Vancouver’s average weekly occupancy rate has been as high as 85% whereas Toronto has only reached  75%,  Montreal at 78%.   Sure Toronto and Montreal have more hotels rooms to fill than Vancouver, but its’ nice to know that what we have here is experiencing such a high occupancy for the summer months.  Even more telling are some numbers from June 2009 to June 2010.  For Vancouver, the occupancy rate was 70% in June 2009 and near 74% in June 2010, That translates to 704 more hotel rooms that where sold and 704 more rooms that needed to be maintained and cleaned, and more to the point at least 704 more customers in the Vancouver hotels and on our streets over the same time last year.

Another number that should tell you we’re doing better  than 2009 is the Average Daily Rate (ADR).  In the same three markets, yup you guessed it!  Vancouver is ahead of the pack in recent weeks with an ADR of $157.00 compared to a high of $137.00 in Montreal and only $123.00 in Toronto.  Vancouver comparing June 2009 to 2010, the ADR rose from $148.52 to $154.16. That’s $100,000 more per month in the Vancouver economy for just accommodations not to mention the spin off to attractions, entertainment and the food and beverage industry.

So what do these numbers tell us about employment in the hospitality industry in Vancouver?  Overall it indicates a strong market, at least stronger than the other two major markets in Canada.

Employees in recent years have had to be more resourceful with job searches, do your homework with regard to the companies you apply to, that’s why we have the internet.  I know you hear it all the time, but believe me it’s true, for those that are persistent and do the back ground research there are jobs in the industry.  Also don’t wait around to see what jobs come up in the papers or posted online, some stats suggest that almost 80% of the jobs found are from word of mouth and networking.  This is particularly true in the tourism industry were people often work at a number of different companies at the same time. They have an incredible amount of “intell” with regard to the hidden job market. So get out there and network!

How many jobs are in BC’s economy in tourism and hospitality?  The Canadian Census for 2006 (the most recent census figures available) groups tourism sector employment over five major groups; food and beverage services, transportation, accommodation, recreation and entertainment and finally travel services.  The Canadian Government NOCC codes identify some 400 different job titles in hospitality and tourism all within these major groups.  Back to 2006, the Canadian Census identifies 271,000 British Columbians employed over these five groups, with more than 147,000 in the lower mainland.  Put another way, more than 55% of the employment in tourism is found in the Vancouver region.  It gets better, some estimates put employment in the hospitality industry in Greater Vancouver to over 226,000 by 2015. Or if you like 80,000 more jobs in the industry from 2006 Census numbers to the projections for 2015, this translates to an average of more than 8,000 new jobs in this region every year.

Remember some tips for your job search:

1. There are jobs out there
2. Be persistent
3. Be prepared for your search and interviews
4. Get more training to enhance your skills and professional development, it increases your marketability
5. Last but not least, develop your professional network in the industry.

Company Profile:

Mike Walmsley is the owner and president of Cobalt Hospitality Consulting specializing in cost solutions for the industry as well as employee training and professional development.  mike@cobalthospitality.com

Egon von Foidl, is a seasoned hotelier with significant international experience in the development and management of deluxe hotels, resorts, golf and spa operations. His practical skills, hands-on management style, combined with a strong sales, marketing and PR/promotions knowledge, as well as fiscal responsibility, has earned him high recognition within the hospitality industry and awarded him the prestigious “CANADIAN HOTELIER OF THE YEAR AWARD” in 2003. What makes his experience unique is, that he not only brings many years of operational experience, but also re-positioning, development, design, and opening experience of hotels, resorts, condo/resort, golf courses and spas operation to the table.

Good afternoon from hot and humid Miami. It has been a busy month with a week long visit to Costa Rica and visits to all key hotels and resorts such as Four Seasons, Melia, RIU, Hilton, Marriott and selected independent hotels. It was very interesting to see that all inclusive operators such as Melia and RIU, located on wonderful private beaches with a wide variety of amenities, would produce occupancies in July of 50% and an ADR in the $120 to $150 range. Four Seasons on the other hand, with rates in the low $400.00 produced an occupancy of 85%. Obviously the rich are not as much affected by the economic troubles. It was always my philosophy that you either operate in the very high end market or pursue the budget market. It is the mid market and in particular non branded properties that feel the strongest impact by the economical swings.

OK let’s get back to the USA and Canada.

When looking at statistics for tourism in Ontario it is still very sad to see that border crossings from the US to Ontario decreased by 14.7% versus 2009. Overseas visits increased by 0.3%. With the economy in the US still struggling and the US Dollar being nearly at par, traffic would expected to be lower. The Euro compared to the Dollar is now near the $1.30 range from 1.48 in 2009. The UK and France had declining visits to Canada, Germany an increase of 5% and Japan a year to date increase of 30%

Ontario showed an occupancy of 57.5% with Toronto showing strong growth and occupancy of 75.8%

When looking at Canada at large, in year over year measurements, The Canadian hotel industry occupancy increased by 11.7 percent to 65.9 percent. ADR was up 5.2 percent to $131.51

When looking at the US year over year measurements, the industry increased by 12.6 percent to 59.2 percent occupancy with the ADR staying virtually flat at $96.31. REVPAR is listed at 57.00.

Among the top markets Boston experienced the largest gain with occupancy of 70.4%. It is also interesting to note that New Orleans is showing gains in occupancy, ADR and REVPAR and is finally getting the deserved support from the travel industry.

I am planning visits to Chicago and Toronto this week, then Boston and NYC next week and back to Miami end of the month.

Much success

Egon von Foidl

President/CEO

HRG Hospitality Resources Group International

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#3 – Running Lean and Overworking your People

I know what you are thinking – Budgets, Bottom Line, we don’t have the money.  The only answer I can give you is spend the money now OR spend twice as much shortly when you have to hire, train and retain 50% of your staff.

Here is what we know – 50% of YOUR STAFF, yes your staff is LOOKING for a new job right now because they feel over worked and under-appreciated.  And believe it or not they really don’t care about your budget or excuses of why they have to work extra hours and receive no compensation or why they have to find a way to do 10 hours of work in their scheduled 8 hours.

It is not hard to see when you go out.  Staff are largely disengaged, you can watch and listen to them complain about their job while they are working and in a time when the market is “flush with great people” looking for work, right?  Well, if there are so many great people out there why is there such average or even sub-par service happening out there?

The answer is easy.  The people you do have don’t like their job – that’s why 50% of them are looking, right now.  When the economy is tough, big business  focus on the bottom line and that’s it.  Profits matter not people, which may have been acceptable when people used to line up for jobs.  But in a day when employers line up for staff, upsetting your current people might not be the smartest thing to do as finding suitable replacements is a huge challenge in its self but when you take in to consideration the cost of turnover (1 years wages) it is twice as costly.

One of the major reasons why they are looking is that they are over worked and under-appreciated!  You know they are because you are too!  It is often difficult to have sympathy or empathy for your staff when your gas-tank it on empty too.  I know, I have been there, in fact it is the exact reason I am a recruiter now.  There is so much downward pressure on the leaders which is then transferred to the line staff.  The reality is that 50% of the people reading this are looking for a new gig and probably for this exact reason.

I want to hear from you on this topic.  Are you frustrated with your current situation?  What would you change if you had the power to do so?

I want your comments and would love to start a conversation.  Please leave your comments and forward this article to anyone you think might appreciated it.

Corey Harlock – the Hospo Headhunter

#2 The second biggest mistake people are making right now is presenting “low ball offers.”

Presenting sub-par offers can kill your business in more than one way.  As we discussed in the previous article, the market is NOT flush with people desperately looking for work.  In fact quite we have seen the opposite happen.  Skilled and qualified people are actually holding out for jobs and offers that will meet their demands both professionally and financially.  Research shows that salaries have actually increased over the past 12 months!  So the chances of you getting an “ace” on “the cheap” is slim and none!

If you are able to land the big fish for a good deal – it will be a short term relationship – I guarantee it. There are some people out there that need to take a survival job to pay the bills, so they will accept your offer and say all the right things.  You will think that you proved me wrong and that you have strengthened your team under budget.  And you have – short term.

We know that 50% of ALL OF YOUR STAFF are currently looking for a new job.  This is true.  50% of all staff out there (yep you read that right)  are just waiting for a better offer to come down the pipe so they can fire you and join a new company and people who are taking survival jobs are at the top of that list.  Think about it.  Would you take a pay cut to do the same job if you had too?  I don’t think so!  Either would the people who you low balled.  So these people are putting in their hours and paying their bills, all the while waiting for their real opportunity to come their way.  I have referred to these employees as rental players. Sure you have beefed up your line up – but on for the short term.  The Free Agent Frenzy is just around the corner and just like pro sports your aces will be looking for go to the team that offers them the sweetest deal.

Turn over HURTS!  Especially when you are turning over key management and execs.  If you do land a big fish for a low price and they start to have an impact on your business – what will happen when they leave you for a job willing to pay them for their experience?  Think about the cost to your business.  When they do leave the market will be even tighter – so finding an equally skilled and available person will be a lot tougher.    And while you are looking for that elusive replacement what will happen to all of the work that was done by the person who left your business without a second thought.  It WILL COST YOU a lot of $!

Now is the time to offer and pay people what they are worth.  Despite what you might be telling them we know that the market is getting better for both job seekers and your business. We are approaching 2005 numbers in unemployment and I bet in sales (for your establishment).  Do you remember 2005?  Setting sales records, feeling the hiring crunch, paying higher salaries?  Well guess what – you are right there again!  Go back and check for yourself.  Look at your sales month over month in 2005.  Look at your occupancy, ADR, AGC; however you are measuring your sales and see for yourself.

Every article I have read in the past few months shows that all signs are pointing up.  Sales, travel, employment, consumer spending etc.  Do not believe your own hype and get caught thinking that you can low ball good people and make it work long term.

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#1 – Assuming that the market is “FULL” of qualified people begging for work

So many people I talk to out there tell me that they don’t require a recruiter, they will just post an ad and we will get lots of great applicants.  Well there are a few things at play here.  I use those job boards too and I know that you will not get “lots of great candidates.”  Secondly, there are just not a lot of candidates out there!

Do you remember 2004?  If you do, you’ll recall that is when things started to “jump” in our economy.  Monthly sales records, companies growing and you started to comment on the lack of good applicants coming through the door and in many cases just the lack of applicants at all.  We to put things in perspective the unemployment rate back then was… 7.8%.  Doesn’t seem so bad does it?  The HUGE majority of our aging population was 6 years younger and still thinking about work.

Currently, where do you think our unemployment is?  Must be a lot higher than 7.8%?  Maybe it’s 8.5% or even close to 9.0%.  NOPE it is currently at 7.9%.  That’s right it is a whopping .1% higher than it was when you were setting your sales records back in 2004!

Go back and see for yourself.  I would be curious to know where your current sales are compared to 2004.  What if they were the same?  What does that mean?  In 2004 you were setting sales records and in 2010 with virtually the same sales you are struggling to recover from a recession.  Hmmm, just food for thought.

My point being – staffing was challenging back in 2004 and we are in virtually the same economic climate we were in back then.  So why then would you think that there are lots of “great” candidates out there in the market?  Were they there in 2004?

 It is time to change our mind set and start to realize that times have changed.  In a world where the average length a person will stay with you is 2 years – yep that is not a typo, and it is getting harder to replace that person with another equally skilled individual, hiring is going to get even tougher.  It will be the difference between success and failure (which has lots of different definitions: closing your doors, working 80 hours/week, losing your family etc.)and remaining small or growing (both in business and units).

My question is what are you going to do about it in your business?

The economy is recovering but wages are going up??? Really!  Do people in our industry feel they get paid fairly in comparison with others or for the work they do.  The answers may SHOCK you.

Harely Carbery was born in Victoria, BC. He grew up in his families Dairy Queen slinging burgers and ice cream. After attending Camosun College in Victoria he graduated with a Hotel & Restaurant Management Diploma. Working for Fairmont Hotels & Resorts across Canada for 7 years took him from the Banquet Rooms at the Algonquin in St. Andrews, New Brunswick to the kitchen in Mt. Tremblant, Quebec to Managing The Wildflower and Wine Room Restaurants at the Chateau Whistler. While in Whistler he fell in love with wine and became a Sommelier through the International Sommelier Guild. Now in Las Vegas, after a short stint as F&B Manager at the Ritz Carlton Hotel he made the move to L'Atelier de Joel Robuchon as AGM/Sommelier and finally Wine Director of Joel Robuchon Restaurants, Las Vegas at the MGM Grand Hotel & Casino.

Since moving to Las Vegas I have had the opportunity to try some amazing wines, many of which I have already discussed in the past. What about wines from those “other” countries?

There are some wines that we are starting to see in the Vegas market that I haven’t seen much of elsewhere, yet. When is the last time you had a Sauvignon from Slovenia or a Tannat from Uraguay? Wines like these and many others are showing up on wine lists all over Las Vegas. Is this crazy Sommelier’s trying to think outside of the box and bring in wines from the far reaches of the wine world to impress well travelled guests; are these wine regions that need to be discovered finally being discovered or is this a sign of the times as many of these wines happen to be “value” choices.
 
I believe that it’s a bit of all three. I have many interesting wines from Slovenia, Lebanon and of course Canada (still not thought of by many to be a serious wine making country) as well as several others on my wine lists. I have them for all the reasons mentioned above; I find guests intrigued to try “new” wines from different countries; I love tasting a wine from a country that you would not think of in the same sentence as France or Italy and of course I also have to have some wines on my lists that are driven by their amazing value. Trust me value doesn’t have to mean cheap!
 
I recommend asking the sommelier at your favourite restaurant for something different next time, I’m sure you’ll be impressed and maybe a little surprised.
 
Cheers!
 
Harley

Work/Life Balance is a Hot Topic these days – BUT is it as important as you think?  What does it mean and how important is it anyway?