Balancing Cost-Effective Labor Management with Profitability
Interview with Richard J. Moreau
Executive VP. Asset Management, Strategic Hotels & Resorts

The artful balancing of cost-effective labor management standards with profitability is an ongoing challenge in the hospitality industry. It has also become increasingly complex when taking into account the interlocking business relationships across today’s hotel and resort landscape. The interplay between owners, management companies, franchisors and operators can at times be daunting—and sometimes even makes headlines. More than ever hoteliers, owners and asset management groups alike are now seeking outside expertise to harness the most advanced technologies and best practices to ensure all stakeholders are satisfied.

Industry veteran Richard Moreau has a unique vantage point in the hospitality business. Having served many different roles over a span of 30 years, he understands how all the stakeholders view the world. Moreau has been involved in asset management as well as both property and multi-unit operation positions throughout his career. At present he serves as Executive Vice President, Asset Management, with Strategic Hotels & Resorts, Inc., an industry-leading owner and asset manager of high-end hotels and resorts. FocusEd sought out Moreau to gain his insight about cost-effective labor management standards in the hospitality industry.

FocusEd: As an owner, how do you ensure that the hotel management companies you employ manage labor to your satisfaction?

Moreau: We have a proven system that works and it has been tested over the course of more than eight years. The use of third-party vendors has enabled us to optimize property utilization; then we get the brand involved.

Whether we’re using UniFocus or an Internet marketing company, it is their responsibility to do the monitoring and reporting then take that back to the brand. Ultimately it is the brand that uses this system and lives by the standards. We must then be diligent in following up to see what the final results are.

FocusEd: What are the key methods or systems you expect by way of labor management?

Moreau: We expect to see each individual task measured at the property level. This enables the development of good workable standards; actual outcomes are then measured against the standards. The dynamics are reported back to operations and shared between the stakeholders. This process gets more input by inviting debate between brand and owner. Then it is important to test this process, whether it is weekly or quarterly. The results should be continually monitored, and then the standards should be reviewed and tweaked according to customer comments or complaints. However, the most important thing to remember is consistency; there must be a constant overview of task performance.

FocusEd: Moving from an operational vantage point to an ownership perspective, do you view labor management any differently now than when you saw it as an operator?

Moreau: Not at all. But what we have done is take labor management to the next level with proven technology that enables us to monitor labor performance more effectively between the owner and operator perspectives. Labor has always been our largest single expense. Determining the best standards is simply a matter of what degree we wish to differentiate our services. For example, a Ritz-Carlton facility may need a different level of service than a Westin or Sheraton property. However, regardless of whether I’m an owner or operator, it always boils down to profitability. Each segment is tied together; service levels are intricately connected to sales, pricing and profits. It is a circle of interrelationships where everything must be evenly balanced.

And ultimately it’s all about a partnership. The vendor, brand and owner all share mutual interests and must work together with adequate information that can make a difference; each party should share a sense of responsibility. Sometimes the owner will try and push its own agenda, but in the final analysis only by each party working together can all the stakeholders achieve their common goals.