Hospitality from the lens of HR

The hospitality sector in India stands at the cusp of innovation, navigating a whirlwind of changes that have been fuelled by the post-pandemic travel demand, technological advancements, and shifting guest expectations. As per recent research by IBEF, the tourism sector in India is projected to contribute US$ 250 billion to the country’s GDP by 2030, generating employment for 137 million individuals. The sector which currently accounts for 35 million jobs has already witnessed a growth of 8.3 per cent over last year (2022) and is likely to surpass 53 million jobs over the next five years. 

As we witness this transformative era in the business of hospitality, for building a long-term sustainable future, it is highly suggested that the sector introduces some innovative approaches toward its HR practices that will help navigate through the challenges related to the availability of manpower, high attrition levels, and low pay scales.

It may be worthwhile to remind you that in the past, the Human Resources (HR) function’s primary focus was on administrative efficiency, ensuring HR processes run smoothly while adhering to legal and regulatory compliance. Though these responsibilities were crucial, HR was often excluded from strategic decision-making and were considered support functions rather than strategic partners. While some of the other allied sectors have been quick and far-sighted to acknowledge HR as “Business Partners”, the hospitality sector still appears to have taken minimal steps in that direction.

Considering the nature of the business and the precedence of how the hospitality sector in India has been functioning for many decades, the overarching business goals which are focussed on managing costs and owner expectations, continue to take priority when compared to implementing and aligning modern HR practices in the sector.

In our endeavour to comprehensively unravel the dynamic landscape of transformative HR practices in India’s hospitality sector, The People Network undertook a pioneering survey that attracted the active engagement of senior HR leaders from a diverse array of domestic and international hotel companies operating in the region. The result was a robust participation of 12 hotel companies, collectively overseeing 1546 hotels across the country. This ambitious survey was meticulously designed to explore and dissect key trends that are integral to the industry’s growth and evolution. From delving into compensation structures to understanding workforce agility, embracing diversity and inclusion initiatives, and assessing the impact of technological advancements on HR practices, this survey emerged as a powerful tool for mapping the sector’s trajectory and aspirations.

It was interesting to note that HR Leaders within the hospitality sector are increasingly being seen as strategic advisors rather than mere administrators. In fact, many leading hotel brands and organisations have made substantial strides in reevaluating and reshaping their HR strategies to align better with contemporary workforce needs. Although, it may be noted that the current state of empowerment for HR leaders to implement certain processes, may vary depending on the specific organisation and its approach to modernisation. 

In a dynamic industry like hospitality, where talent and service excellence play a pivotal role, compensation and rewards programs hold the key to attracting and retaining skilled professionals. A spotlight question, “Do you think compensation & reward programs have evolved for the better in the hospitality sector?” prompted respondents to reflect on the industry’s progress in this crucial aspect. The findings are a mixture of both optimism and concern. Out of those surveyed, a significant 61.1 per cent believe that the compensation landscape within the hospitality industry has not advanced at the same pace as other service sectors. This perception highlights a lingering challenge within the sector: the struggle to keep pace with the evolving pay structures across other industries. It’s worthwhile to acknowledge that improvements have indeed been made in compensation structures however these enhancements, seem to be concentrated primarily at the Department Head level and above, indicating a hierarchical gap in compensation adjustments. 

Another intriguing facet explored by the survey is the feasibility of implementing dynamic variable payout structures across all employee levels, including front-line staff. A notable 61 per cent of respondents revealed the existence of such structures for senior management-level staff, intricately linked to the hotel’s sales and Gross Operating Profits (GOP). What is particularly encouraging is that 33.3 per cent of participants are open to exploring the applicability of similar structures for front-line staff.

The potential of dynamic variable payouts is underscored by the concept’s strategic value. At a time when the hospitality sector grapples with a dearth of skilled manpower, especially at entry-level positions, such incentive-driven compensation approaches could spark interest and engagement among employees. By directly associating pay increases with factors like sales performance and guest satisfaction scores, the approach recognises and rewards the employee’s direct contributions to the hotel’s overall success. Moreover, this strategy could provide a much-needed boost to the often-unimpressive compensation packages for entry-level positions, making them more attractive to potential candidates.

Digging deeper into the data, the survey exposed an underlying challenge: the average annual salary increase within the hospitality industry remains stagnant at 8-9 per cent. Despite the ever-evolving nature of the sector and the increasing operating profits, and demands from both guests and employees, the incremental growth in salaries, especially for entry-level roles, has failed to keep pace. One of the primary reasons behind this stagnation can be attributed to the highly competitive nature of the hospitality market. The industry is known for its thin profit margins, which often leave little room for substantial salary increases. As a result, many hospitality companies find themselves constrained by budgetary limitations, forcing them to maintain a conservative approach to employee compensation. 

In the ever-evolving landscape of the business world, the term “Workforce Agility “has garnered significant attention across industries. In the realm of hospitality, where customer expectations and market demands are in a constant state of flux, understanding and harnessing workforce agility is more crucial than ever. Our research delved into how companies are adapting to create a dynamic work environment and dig deep into the factors which are acting as obstacles to agility. The highest annualised attrition, a staggering 48 per cent, was observed among frontline staff. 

A considerable area of concern in the hospitality sector has been long work hours, attributing to burnout and impacting employee satisfaction. Surprisingly, the survey revealed that despite recognising this challenge, a substantial 53 per cent of respondents had yet to implement a five-day workweek across their hotels. I believe recognising the benefits of providing employees with an additional two days off per week, will help align with the industry’s efforts to attract and retain top talent. In a highly competitive job market, offering a more balanced work schedule can serve as a strong incentive for prospective employees, particularly those seeking better work-life integration.

While the nature of hospitality work might not allow for remote arrangements in all roles, a significant 53 per cent of survey respondents believe that remote work options could alleviate talent management challenges in certain support functions within the sector. Though it will be crucial to assess each role’s feasibility for remote work based on its specific job requirements and responsibilities. Furthermore, this reveals an acknowledgment of the evolving work landscape and a readiness to adopt new-age practices.

With the gig economy on the rise and flexible work arrangements gaining traction, the role of HR in the hospitality industry is transforming. The hospitality industry is at a crossroads, with its future intricately tied to its ability to navigate change. By embracing practices like the five-day workweek, harnessing remote work possibilities, and adapting HR strategies to the changing talent landscape, the hospitality sector can not only mitigate challenges but also position itself for sustainable growth. 

Focussing on another trending topic of Diversity and Inclusion in the business of hospitality, the survey’s lens turned to the upper echelons of leadership, where the role of General Manager (GM) holds immense significance. Unveiling the data, a significant 61 per cent of respondents indicated that women GMs constitute less than 10 per cent of the total GM population in Indian hotels. This figure, although reflective of a gender imbalance, also paints a picture of progress. Historically, the General Manager position was predominantly occupied by men, and one of the reasons behind the rise of women General Managers is the growing recognition of the unique skill sets that women bring to leadership roles. Furthermore, increasing awareness and advocacy for gender diversity have prompted hotel companies to proactively seek out and promote women to leadership positions. Delving deeper into the sector’s diversity landscape, the survey also reflected another interesting fact about women’s representation across other functions in the hospitality sector. While women are widely noticed to take up roles across functions such as Human Resources, Sales, Marketing, Learning & Development, however, a striking revelation highlighted that a significant 72 per cent of the surveyed hotels have less than 10 per cent women in specialised functions such as finance.

Continuing with the overall theme of Diversity and Inclusion in mind, while many sectors are now embracing LGBTQ+ diversity to create equal job opportunities for everyone and foster a sense of belonging and safety for LGBTQ+ employees, guests/customers, the hospitality sector has largely remained silent on this subject.  While the hospitality sector in India has less than 5 per cent of its total employee base constituting this community, demonstrating a commitment to LGBTQ+ inclusivity can help attract a diverse pool of talent, enhancing a company’s ability to recruit and retain skilled employees from different backgrounds. After all, employees are more likely to feel valued and loyal to an organisation that embraces their identities and respects their rights.

Our survey also unfurled the canvas of the hospitality sector’s technological journey in HR, revealing how organisations are weaving digital solutions into the fabric of their people-centric practices. The opening question, “How has your organisation leveraged digital technologies for HR processes?” casts a spotlight on the strides made in integrating technology.

The responses highlighted that most hotel companies have given priority to the adoption of employee self-service portals or mobile apps for easy access to personal information and leave management. Furthermore, it is encouraging to note that HR in the Indian hospitality context is taking conscious steps to rely on data-driven decision-making in order to optimise talent management, enhance employee experiences, and drive overall organisational success. While the sector still has a long way to go, the use of data and analytics in HR processes has enabled hotels to make informed and strategic decisions based on real-time insights. 

Listed below are some of the ways in which data-driven decision-making is being followed by the HR function across the hospitality sector - 

Conducting Employee Engagement Surveys

Measuring the efficacy of various hiring platforms used in talent acquisition.

Employee Turnover Analysis: Data-driven insights into turnover rates, reasons for attrition, and exit interview feedback helps the HR team to identify trends and develop retention strategies.

Restructuring of Compensation & Benefits

Productivity metrics-based hiring

Balanced Score Card-driven business performance evaluation

Succession Planning

Implement Employment Branding Campaign 

The survey’s analysis revealed its success in uncovering shared challenges and distinct strategies among various hotel brands.. A call for industry-wide collaboration emerged, emphasising the need to unite and create targeted campaigns that foster a more positive, robust, and forward-looking image of the sector.

Creating better advocacy around the hospitality sector requires a coordinated effort from industry stakeholders which include owners, operators, employees, and hospitality consultants/advisors. By proactively showcasing the industry’s potential for growth which offers competitive compensation packages, and emphasises employee well-being, the hospitality sector can attract a new generation of talented individuals eager to contribute their skills and passion to this dynamic and rewarding field.

Launch “Incredible Hospitality Campaign”: Hotels, restaurants, resorts, and other related establishments should collaborate to launch nationwide campaigns that showcase success stories of individuals who have built fulfilling and successful careers within the sector. These campaigns can feature executives, chefs, managers, and front-line staff who have risen through the ranks, emphasising the industry’s potential for career growth and advancement.

Social Media for Hospitality Sector Advocacy: Leverage social media platforms creatively to showcase the sector, the culture, employee stories, and achievements. A compelling sector and employer branding strategy on platforms like LinkedIn, Instagram, and Twitter can attract top talent and create a positive brand image.

Raising Awareness: Launch campaigns and initiatives to raise awareness about the diverse career opportunities available in the hospitality sector. Highlight success stories of individuals who have built fulfilling careers in the industry.