The annual circuit of hotel conferences is in full swing, and it occurred to me that for as much as we talk about development cycles, new brands, PIP costs and capital stacks, you’d think we were only in the real estate business.

But, hospitable, service minded people turn a piece of real estate into something much more valuable than temporary shelter.  Those people breathe life into the building, infuse personality, warmth, and a sense of place that no amount of trendy décor and thoughtful design ever can.

So, doesn’t it make sense that we should value and nurture that human capital with the same effort and vigilance that we manage the rest of the asset?

We believe that every hotel also should have a human capital business plan, with measurable goals surrounding recruiting, training, retention, productivity and recognition.  At New Castle, we invest in our human capital by planning and budgeting for success.  We reward our associates for referring new hires, and provide thorough, meaningful training that helps them be successful.  We anticipate rewarding people for meeting goals and we expect to have fun periodically.

Our associates are the heart of our business and account for one-third of a hotel’s operating expenses.  Associates who are nourished on a steady diet of responsive leadership, thoughtful training, and empowered decision making are better able to perform the key functions of hospitality.    That collective knowledge, talent, skills and abilities, experience, judgement and wisdom represent the human capital accrued at each of our properties every day, and we squander it at our own risk.

Consider Mary the housekeeper who does a quick and meticulous job cleaning her allotted rooms each day.  She’s been with the hotel for three years and is liked and respected by her co-workers who seek her out for help on particularly messy rooms and even personal matters.  She’s a leader in her work unit, even though she has no official standing as a supervisor.

Is this a person we can afford to lose?

Mary’s positive and productive example can influence the operation more than even the GM, and we can learn a lot from her.

Modern leaders cannot afford to dictate standards and operating procedures.  They need to coach for understanding, collaborate on goals and get buy-in. Most importantly, they need to set the example. Throughout my career, I’ve always told my team, “if you want respect and want your associates to feel good about working with you, then you have to give respect to get it.”  I fully believe that in all areas of leadership, you should give more than you get.

Look at it this way:

Recruiting Mary’s replacement will cost somewhere between $50 – $350, and the hotel will spend another $1600 training and on-boarding.  And, you can’t even put a dollar figure on the value of the lost peer leadership.

Multiplied by even one person per month, that’s a lot of cash and human capital going out the door needlessly.  And the cost increases exponentially when you consider replacing a front desk agent. Even an experienced GM will take a full year to get firing on all cylinders.  That first year’s salary is expensive when you factor in the support that’s required from corporate staff, the inevitable mistakes and lost opportunities.

Wouldn’t it be better for your operation, and your bottom line, to properly value and invest in associates at every level so that they are primed for success and don’t leave in the first place?  Wouldn’t it be more productive and fun to invest in good training and the occasional ice cream social, than recruiting ads, new-hire orientation and overtime pay for those left behind?  Wouldn’t you feel good knowing that you fostered an environment where people wanted to work?

Every hotel is going to have turnover.   We have our share, and it’s always more than we’d like.  But, when you realize that our number one source of new talent is internal referrals, we must be doing something right.  Our associates recommend us to their friends and family and our recruiting dollars are doing double duty rewarding an existing associate and finding a new one.

Human capital is the largest single operating expense at any hotel and having a business plan focused on modern methods of managing those critical resources is as important as any sales and marketing plan, maintenance program or other business plan.   Owners and investors are well-advised to support human capital planning.

Invest in your staff, appreciate their value and your hotel will flourish.

April, 2018