Manpower shortage hits payroll costs in hotels
NEW DELHI, MUMBAI: The hotel industry in India is faced with a shortage of quality professionals and a sharp rise in payroll costs, and the crisis will deepen with the number of hotel rooms set to more than double in five years.
"There is a lot of pressure on hotel bottom lines," says Natwar Nagar, managing director of HVS Executive Search that helps hotels recruit staff. "The demand for manpower from across new hotels is coming up and supply is naturally restricted. Hence there has been an increase in per-employee costs by default," he says.
Hoteliers say their payroll costs have almost doubled in the last three years. Dilip Puri, managing director at Starwood Hotels and Resorts, says that today, typically the industry payroll costs range anywhere between 20% and 30% of a company's average revenue, up from 15-17 % three years ago. Companies blame this on high attrition rates across the industry, over-hiring and growing sizes of food and beverage outlets. Perhaps the biggest reason for the manpower crisis in hotel industry is that a majority of fresh hotel management graduates prefer to join allied industries. "We have seen that students from hotel management institutes move to other areas like banking sector, travel and tour operators, smaller restaurants, etc," S Kacker, principal of Institute of Hotel Management at Dadar in Mumbai, says. He says that only around 30% of the students join hotel industry, while the rest move to other industries or pursue higher studies.
"The main reason why students choose other sectors is due to better pay packages, working hours and conditions than hotels," Kacker says. With hotel room supply in the country estimated to increase 111% over the next five years, the manpower crisis may get a lot worse for the industry . Ashwin Shirali, regional director of human resources at Accor Hotels India, says payroll costs can go as high as 35-40 % of annual revenue for a new...
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