Hotels reduce employees and redistribute resources to cut costs

Premier hotel brands like the Oberoi, Renaissance, Taj, Vivanta, JW Marriott, The Westin have been forced to eliminate excess staff in a desperate attempt to stay afloat in a difficult business environment.

Hotels reduce employees and redistribute resources to cut costs

Premier hotel brands have been forced to eliminate excess staff in a desperate attempt to stay afloat in a difficult business environment due to closed properties and mounting losses. Several luxury hotels, including the Oberoi, Renaissance, Trident, Taj, SeleQtions, Vivanta, JW Marriott, and The Westin, have reduced their staffing levels.

The pandemic's lockdown wreaked havoc on the hotel industry's profits in FY21, with accommodation occupancies plummeting to their lowest levels ever across the country. Hotels were either entirely closed or functioning with occupancies of only 10-15% during the peak of the lockdown, as international tourist arrivals came to a standstill. Healthcare personnel, quarantined visitors (at reduced prices), and long-stay guests occupied rooms.

Oberoi cuts staff by 30%

We have decreased our manpower by just under 2,000 employees, which represents a 30% reduction,” said Vikram Oberoi, Managing Director and CEO of EIH, the Oberoi Group's flagship. “In nature, not everything is permanent. As business levels improve, some of it will return. We'll keep focusing on multi-skilling and deploying technologies. Currently, we have 4,500 (employees) compared to 6,500 before COVID-19.”

Oberoi was speaking with analysts following the disclosure of EIH's consolidated net loss of Rs 107 crore for the April-June quarter. The deficit in the first quarter follows a total net loss of Rs 384 crore in FY21.

25% reduction at IHCL

The Indian Hotels Company (IHCL) of the Tata Group, one of India's largest hotel chains with 150 locations, has cut its manpower per room by 25%. The staff-to-room ratio was 1.14 in March 2021, down from 1.53 in April 2020. The SeleQtions and Vivanta brands had the most personnel changes. With more than 34,000 employees, IHCL is the largest employer in the Indian hospitality sector.

IHCL redeployed workers to other properties opening in other areas under a hiring freeze. The business also launched A1, a new programme in which the same person performs many tasks throughout the course of an eight-hour shift.

We redeployed workers in new properties that are launching and redeployed certain corporate employees in other Tata group firms, multi-skilling them,” said Puneet Chhatwal, Managing Director and CEO of IHCL. “We scaled our personnel in many areas so that they can work in multiple departments in an eight-hour shift, and that is the new style of working.”

Chalet Hotels, whose brands include The Westin, JW Marriott, and Renaissance, and which are promoted by the K Raheja family, have likewise rationalised their workforce to enhance production and efficiency. By the end of FY21, the Mumbai-based firm employed 2,817 temporary and contract employees, up from roughly 2,900 in FY20. For the second quarter in a row, Chalet Hotel's staff-to-room ratio was 0.74 workers. In December 2019, the employee to room ratio was 1.18.

Several hotels face the risk of permanent closure

According to the Federation of Hotel and Restaurant Associations of India (FHRAI), the pandemic cost the country's hotel industry about Rs 1.3 lakh billion in revenue in FY21. According to the Hotel Association of India, about 20-25% of branded hotels in India are facing irreversible closure.

Due to a shortage of operational cash and non-payment of staff salaries and vendor bills, the Hyatt Regency in Mumbai unexpectedly closed its doors in June. Its 300 employees filed a complaint with the industrial court against the property's owners, Asian Hotels (West).

Source: Money Control