A senior executive in an audit firm checked into a budget hotel on his recent trip to Canada. The hotel had installed an ironing table on each floor for its guests to use themselves. Similar arrangements had been made with water dispensers, and so on. The idea was to do away with the concept of a bell boy, or room service.
This hotel is no exception, as most international chains in the budget and upper categories keep the staff-to-room ratio low, contrary to the Indian hospitality scene. But, things are set to change in India, too. “It’s not an easy process, but hotels have started reducing their employee-to-room ratio in India to cut costs. But, we are still on the higher side when compared with chains abroad,” says Kaushik Vardharajan, managing director, HVS Consulting.
With costs under pressure, the payroll expenditure as a percentage of revenue has increased from 10-12 per cent to 18-20 per cent over the past year, experts say. Lalit Hotels, for instance, employs close to three staff members for every room, which is significantly higher than the international norm of one per room in the luxury category.
| GLOOMY PICTURE | |
| Employee per room in India | |
| Luxury | 2.70 |
| Upscale | 2.11 |
| Mid-market | 1.52 |
| Budget | 0.72 |
| (The global average is almost half the Indian average) Source: HVS Indian hotels manpower survey 2011 edition | |
“Our aim is to bring our ratio down from 2.7 to 1.75 staff per room by next year. We are already encouraging multi-tasking in order to manage our employee costs and going forward, even the hiring would be done very judiciously,” said Jyotsna Suri, chairperson, Lalit Suri Hospitality Group.
As the hotel inventory in India increases, the cost of labour is expected to rise alongside, making cheap labour unsustainable. Therefore, hotels are expected to pay a lot more attention to quality and training of employees rather than adding number to the manpower. As costs come under pressure, hotels across categories, including the luxury chains like Taj and Oberoi, are also looking at rationalising their staff-to-room ratio, an industry analyst said
EIH Ltd, which operates the Oberoi Hotels and Resorts, saw a 32.7 per cent decline in the net profits for the quarter ended March. Experts say in the current economic climate there is nothing much that the companies can do to improve their top line, for factors beyond control.
“Despite encouraging signs in the first half of 2011, there was growing uncertainty during the latter part of the year. As a result, recovery has been fragile during 2011. Room rates have been subdued and it has not been generally possible for hotels to revise room rates upwards,” P R S Oberoi, chairman, Oberoi Group, had stated earlier.
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Industry watchers say expectations of the business traveller have changed with so many more options available across different segments, which is bound to bring about rationalisation of costs as well as rates. “Companies are facing pressure on the bottom line. There is consciousness among hoteliers not over employ labour, because it has been coming cheap till now, but it has not translated into any visible change yet,” said Pankaj Arora, managing director, Protiviti Consulting.
Intercontinental Hotel Group, which operates the brands Crowne Plaza and Holiday Inn in India, has double the staff-room ratio in India compared to its global markets. The ratio for Holiday Inn is in the range of 1.5 to 1.8 staff per room, while in the US, it is only around 0.6 to 0.8. “The level of attention can be significant in India. That does not necessarily mean we don’t deliver service to our global customers. It doesn’t matter how many people you have. The interaction between each individual is equally important,” said Chris Moloney, chief operating officer-southwest Asia, IHG.