Labor Management in the Hospitality Industry
(A Guide to the Processes and Systems — Part 2)

By Ron Strecker, Len Wolin & Ken Heymann

The three primary areas to forecast in the hospitality industry are rooms, banquets, and revenue centers. A revenue center may be a restaurant, spa, parking garage, gift shop, etc. From a systems perspective, the most advanced forecasting systems are in rooms, followed by banquets/catering. Very few organizations are using sophisticated tools for revenue center forecasting. It is important for organizations to implement forecasting tools that assist outlet managers in developing weekly business volume forecasts for those areas as the labor use of numerous employees is dependent on revenue center forecasts.

Forecasting Systems

A forecast system should help with the forecast process by organizing the information and applying mathematical analyses to the numbers. For example, data should be organized by day of the week and time period (meal or shift, as appropriate). It should also identify unique events (holiday weekend, city-wide convention, etc.) when conventional trends aren’t sufficient.

Trends can be analyzed via rolling (moving) averages of recent volumes, by established relationships (percentage of another factor), and by statistical methods (regression). Because different business considerations affect different volumes, the forecast system should be flexible enough to allow for multiple methodologies. For example, transient rooms are typically forecast using pick up (the difference between booked rooms at a point in time and actual rooms sold). Pick up can be expressed both as a percent and as a value. However, group rooms are not forecast based on pick up as the pace at which one group consumes a block of rooms is not necessarily a predictor of how another group will consume the block.

While rooms forecasting lends itself to regression analysis, cover forecasting may vary from outlet to outlet. An upscale restaurant which draws business from the local community needs a forecast that looks to recent trends (rolling averages), same day last year and other values that are appropriate to a free standing restaurant. A café which draws primarily from in-house guests should be forecast using a regression model which accounts for trends, in-house guests, those inhouse guests attending banquets and (if appropriate) local community members meeting in the hotel who are potential meal customers. For accurate forecasting, an outlet located within a hotel must have a forecasting system that can identify the difference between business generated by in-house guests and local patrons.

As hospitality forecasting is not a perfectly objective process (some groups may use outlets, some may not) the LMS (labor management system) forecast system must also account for unique events (which call for distinct data assessments) and, just as importantly, input from the management team which allows for the establishment of a final forecast value.

Planning Systems

If an effective labor plan is only as good as the labor standards on which it is based, then an effective labor management system is only as good as the planning system. This means that the planning system must effectively incorporate the labor standards into the labor management process.