Cornell Nolan School faculty expert Bruce Tracey, Jake Basham from Tao Group Hospitality, and Starwood's Clio Knowles discuss solutions for addressing the hospitality industry's employment crisis.
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Starwood Hotels - starwoodhotels.com
Tao Group Hospitality - taogroup.com
With approximately 17.1 million employees, the hospitality and leisure industry remains one of the largest and, unfortunately, most volatile employment sectors. Front-line turnover rates continue to hover around 50% to 80%, and there are an estimated 986,000 current job openings in restaurants and hotels alone. The combined impact of turnover and vacancies threatens both operational stability and industry growth.
This Keynote will examine current labor market conditions and explore innovative solutions reshaping hospitality workplaces. From leveraging new technologies to reimagining traditional workforce management approaches, our panel will analyze strategies to address these challenges. The discussion will highlight both immediate solutions and long-term initiatives that are creating more stable, adaptable work environments.
What You'll Learn
Intro: Welcome to Cornell Keynotes. Today we're joined by Bruce Tracy, professor at Cornell's Nolan School of Hotel Administration, alongside Clio Knowles, chief people officer at Starwood Hotels, and Jake Basham, chief administrative officer at TAO Group Hospitality. Together, they tackle one of the hospitality industry's most pressing issues.
With frontline turnover rates hovering between fifty percent and eighty percent and nearly one million job openings in restaurants and hotels alone, the sector faces unprecedented workforce challenges. Our panel explores innovative solutions reshaping hospitality workplaces from leveraging new technologies to reimagining traditional workforce management approaches.
Much of what they discuss connects to hospitality management and human resource principles taught in the Cornell General Manager's Program. Check the episode notes for [00:01:00] more details. And now here's our panel discussion with Bruce Tracy, Clio Knowles, and Jake Basham.
Bruce Tracey: let's start, Jake, with your take on the current state of play regarding employment, and just give us an overview of what you're looking at both externally and what you're hearing from some of your own team members.
Jake Basham: Sure. Thanks Bruce, and thanks everyone for joining on, uh,, this very timely topic. , I think what we're seeing in the hospitality industry right now is, really a mirror of what we're seeing , in the economy.
You mentioned it being a volatile,, workforce segment, and I don't think that I can disagree with you on any of that. It has a branding problem. It's settling in post-pandemic, but I think the hospitality industry has a branding problem. As we've seen the economy, invert into a K-shaped economy, I think we're seeing that in the hospitality sector as well.
And I think the answer I would give you would differ based on market segmentation, whether you're in the luxury segment or you're in the middle tier or, value segments of [00:02:00] our business. But speaking about the branding problem specifically, it's an industry that's lost its shine, Bruce.
I remember when I was coming up and, got my first job as a bellman, at the Hilton in Salt Lake City, and I was 20 years old, and there was a glamour to the hospitality business. I remember the first time a general manager walked into the hotel in the pocket square and the Italian suit, and the level of everything that, that they, we did in terms of service, and some of that shine has worn off our business, and people no longer view our industry as a safe bet.
I think that, we've not fully recovered from, the pandemic in terms of trust of the workforce. I think people that were hospitality veterans saw that the impact the pandemic had and the economic volatility post-pandemic has had on our business. But let's face it, we all know this. It's an industry that has long hours, requires nights, weekends, impacts on your social life, high stress.
And then when you look at some of those things in regards to the newest generation of the workforce, one, [00:03:00] they're not as comfortable with conflict, they're not as comfortable with face-to-face interaction. All of these things are inherent in the hospitality industry. So right now, we have a gap.
We have a gap to close on how we market ourselves to the broader workforce. I definitely think that this is different in the US and abroad. I think that some of the prestige still exists and some of the dedication to service is still more prominent abroad than in the United States, certainly. But if we don't, start marketing ourselves as an industry differently and marketing our companies to our prospective workforce, we're gonna continue to beat our heads against the wall and have a very difficult time attracting talent.
Clio Knowles: I fully agree with what Jake was just saying, and I agree with the branding problem. I also think there's an education problem. Post-COVID, we've seen a lot of the hospitality programs at universities and schools shut down or, finish offering those degrees and thankfully Cornell does still offer it.
But we've also seen a shift in sort of the focus of a lot of students graduating from the Cornell program. They're not necessarily as interested in the operating roles, but they're focused more on the development [00:04:00] growth. I've seen a lot of the culinary programs shut down, and, the hospitality industry is still growing, albeit maybe at a slower pace than it was.
But if we don't have the training and the programs to, help interest students in that, it's very difficult as well., I don't see the same in Europe, so to Jake's point, I think that in Europe and Asia-Pacific, the hospitality industry is still viewed with a lot of prestige and, we see a lot of hoteliers and general managers coming from those backgrounds.
But I do think that we've got to shift the needle here in the US in order to attract people back to the industry. To Jake's point of, the newer generation maybe not liking face-to-face interactions or not being as good with sort of difficult interactions, and unfortunately, we did see a lot of those during the pandemic in the hospitality industry.
Those frontline hospitality workers took the brunt of a lot of people's anger at the overall pandemic situation, and it did scare some people away from the industry. So I think we've now got this opportunity to reset the way hospitality's perceived, and that hospitality is a long-term career, not just a [00:05:00] short-term gap.
Jake Basham: I think that one of the things that, I don't know if Clio's seen it, but I've certainly seen it, in our business, is a huge gap between operations-focused roles and corporate support roles. I actually think the corporate segment of the hospitality industry is extremely strong.
We post any corporate position, and whether it be in human resources, finance, marketing, and within 24, 36 hours, we have 400 or 500 applications for these positions. At the same point in time, if we're looking for a sous chef, a line cook, a front of house restaurant manager, or a nightclub or day club manager, we're having to go out and source and attract those people.
The days of opening the job and waiting for the funnel to take care of it are long over. I think that you've seen this shift, , in the corporatization of our workforce, really materialize and this shift away from, the operational, aspects of hospitality. And if I was, advising any young student, [00:06:00] coming out, I would say go in operations first because amount of experience that you can get and the speed in which you can grow through the organizational structure, is much, much faster than what you would see on the corporate side of the business.
Bruce Tracey: Oh, I love that insight. Yeah, absolutely. Lots of wonderful, learnings that can happen when you're, knee-deep and neck-deep in some of those kinds of, day-to-day, frontline issues. You mentioned some shifts as well. I'm wondering if you could speak a little bit about the priority of work among, let's say, especially, younger generational employees that we rely on a great deal in many markets and in many concepts.
And is, the priority around work also shifting a bit as well, and how are you seeing some of the, the preferences or values of the younger generation play out?
Jake Basham: I think that what we've seen with the younger generation is an inherent distrust in institutions.
I think that that is presenting itself at the societal level, but also, bleeding over into corporate America as well, where they're coming in with kind of a side eye or, a pessimistic [00:07:00] view of what it is like to work, particularly for a large corporation, which, many of us in hospitality work for these large corporations.
And the view of work is very different. I remember when I started and I knew that I was, going to make life sacrifices and do what I need to do, change, relocate 10 times as I was climbing through the hospitality org structure. And I think what I've seen, I'm overgeneralizing of course, with the younger generation, is they're less likely to sacrifice life and life experiences, for that of work, particularly if they don't see inherent value in that work, whether that value be a connection to meaningful work, economic improvement or, , career growth and experience growth.
And oftentimes, the hospitality industry, if it, at its best, is some of the best in the world at, advancing people quickly through an organizational structure, even without advanced education in some instances. But they don't wanna give up their nights, they don't wanna give up their weekends, and they wanna go out with their friends, and, I, I get that.
We've all been 20, 21 years old [00:08:00] before.
Clio Knowles: I do think that part of this also did come, again, as a result of the pandemic when, to your distrust of institutions, hotels laid everyone off because we had to close the doors. It felt a lot more scary to, employees at the time when they were reentering the industry, like, "How long do I actually have this job for?"
So those days of, having a job for security reasons has gone away. I think also with the pandemic, in the generation that's entering the workforce now got used to doing schooling from home, doing a lot of things remotely, and the hospitality industry is inherently a hands-on industry.
You cannot tell a bellman, "Sure, you can work from home today." A housekeeper can't choose to work from home. So having to show up and be at a workplace every day is also not something that a lot of the younger generation seem ... It doesn't seem to appeal to as many people that being said, I think the point that you made about it's an industry where you can also grow very quickly is a really important one.
I personally entered when I didn't have a bachelor's degree and, was able to gain my degree while I was working. And here I am. We [00:09:00] recently did an internal training program because we realized that a lot of people aren't coming out of formal hospitality programs anymore.
So we did a training program and a mentorship program with 80 participants, 21 of whom were promoted within the course of that six-month program. So I think that now what we're finding is the onus is more on the companies to deliver some of that training and to deliver those paths to growth and opportunity within the company.
Go ahead,
Jake Basham: Jake ... One element, that Chloe touched on is she's right that, as the economy, quivers and, as the pandemic shut down, hospitality is gonna be the first industry that's impacted. And for us to ignore that reality, would be a mistake.
And one of the things that we've also seen, particularly, I can't speak to hotels as much as I've been in restaurants, nightclubs, and day clubs the last several years, but we've seen a lot of margin compression, inflation has happened and, the response to that organizationally, of course, is to, make sure that you're as efficient as you can on the human capital side of the ledger without compromising guest experience.
What does that mean in a real world scenario? [00:10:00] It means that you're doing more with less. It means that the people that are in your venues or in your offices are working harder and working longer than they have before, oftentimes for similar pay, and, that's a tough thing to put on the flyer and sell to people.
And so, we have to get creative in how we go about doing that. And then one of the things that keeps me up at night, Bruce, is, and aside from the macro talent issues that we have to deal with on recruitment and retention, is the burnout of our management workforce, particularly
within the operation. That's a big concern. It's always been a concern, the entire time I've been in hospitality over the last two decades, but I think it's even more so now.
Bruce Tracey: Oh, I appreciate that. There's a lot of sensitivity around those kinds of challenges. Uh, we have a question from Randall, and it speaks to some of the things you were just, addressing.
He notes, "I myself have been in ops since the day I turned 18, and now extending my education. Now that being said, I've run into a few problems being what I feel is stuck in my current role as an [00:11:00] executive steward. How do I break free and expand beyond ops?" You know, to the notion that you were talking about earlier about advancement, what are some of the, , words of wisdom, Clio you can offer, and then Jake?
Clio Knowles: Yes. It's very hard to say without additional context on the organization and the role. But I think, you're taking the right steps if you're already taking steps to get advanced education. And the key thing is also just to keep putting yourself forward, making sure that your people or HR department know that you're interested in growth, that you're speaking to the people in the departments you want to grow in.
Not just, "Oh, I'll do anything else," but being very specific and applying for those internal roles, um, and having those conversations with both your manager and the manager in the department you want to work in. I think those are really key ways to just be noticed and get that attention for you
Jake Basham: Certainly. I agree. So many people don't make it known about their desired intentions and, the fact that they wanna grow. So make sure that that is known in your organization, both in the operations hierarchy as well as in the human resources side of the business. [00:12:00] And then, one of the things that some HR people might disagree with me that I'd give you advice on is, uh, don't be afraid to switch companies.
If, uh, you make it known and you put the time in and investment and your company can't meet its end of the bargain, there's a lot of companies that are looking for talent all over the place. We're among them. And so don't be shy about switching companies if your current organization can't meet its end of the bargain and your expectations.
Bruce Tracey: That's great advice, Jake and Clio. Thank you very much. So if the industry has a bit of this image problem, what are some of the things that you all are doing to try to change perception and, and demonstrate that there's an authentic, focus on a very strong and sustainable value, employee value proposition?
What's in it for the employee? What kinds of things are you all doing? Jake, we'll start with you.
Jake Basham: Sure. First and foremost, I've never spent more time thinking about marketing, ever as I have in the last three to four years. HR people, particularly those of us who touch talent [00:13:00] acquisition and retention, marketing doesn't stop at, the talent acquisition.
Retention is huge on internal marketing. Is thinking really like a marketer. What does that mean? Who is your target audience? Who is your key demographic? There would probably be different answers from my organization, to that of Clio's. Tao Group's, workforce skews significantly lu- younger, than hospitality average based on the nature of our business.
So we always think about what are we putting out in terms of the public image of our company, and how do we tie the employment experience to the guest experience? Oftentimes in hospitality, the hospitality company spend a lot of time promoting the guest experience, and that's not indicative of the employee experience.
We're a little bit different. Our employee experience, we want it to be as close to the guest experience as we can, putting aside getting insane in a nightclub and, you know, popping bottles. But essentially, we sell the party. We sell the experience. We want our team members to go in. I can't tell you how many times I've had HR people ask me, "You let your team members go in the nightclub [00:14:00] and drink?"
Well, yes, when they're off the clock, we do. We encourage them to go into our venues. We want them to party. We want them to feel as if they're a part of that family because we're selling the experience, and that's how we market, to a prospective demographic that is younger and wants those life experiences.
We might not keep them for 15 years, Bruce, but we sure as hell can keep them for three to four and have a-- give them a ride of their life
Bruce Tracey: I love it. Well- Sign me up.
Clio Knowles: Yeah, well, definitely very different, uh, industries from that perspective. But I think there's a lot of similarities to what Jake was saying on the marketing side.
So for us, our employer branding is just as important as our guest branding, and making sure that, like, when we're recruiting team members, we don't have a picture of a guest doing yoga on a rooftop at sunrise because that's not what the team member experience is going to be like. What we might have is a video of a chef actually in the kitchen cooking a dish so that, we're really relating to what the team member experience is going to be.
And to that point, we took marketing's guest journey experience, and we created our own team member [00:15:00] journey. So where are the touch points? Recruitment, onboarding, training, retention, recognition. Once they leave, do we stay in touch with them because maybe they'll come back? And we do have a lot of, rebounds where people have left and then rejoined the organization.
The grass is not always greener. And that also goes to, our heart of house, making sure our heart of house is branded. We're actually doing a project right now where we're working with some of our celebrity chefs to create a team member dining program that they're going to help us curate.
Because we put so much focus on the guest, uh, food and beverage experience, we want to make sure that our team members feel that same love and, and passion. So I think for us, to Jake's point about marketing and branding and making sure that we're really looking at what is the team member experience and what is the team member joining for, and then sustaining that through the culture and through all of the different touch points of making sure that we're being really thoughtful and deliberate in how we're doing it.
There was a great quote, and I don't remember who to attribute it to, but it was like, "Every company has a culture, but not everyone has a deliberate culture." So making sure that we're really deliberate in how we're approaching it, [00:16:00] is really important to us.
Jake Basham: I think that's so well said, Clio. , And Bruce, I think that what I would encourage for those of you who are in human resources and joining this keynote is to review all of your public channels.
Review your website, review your LinkedIn feed. One of the things that, you know, that we did in TAO Group is, , we've essentially 4X'd our LinkedIn followership by partnering with the same marketing, team members that run all of our social media channels. We have millions and millions of social media followers through all, all of our different channels, and populating our LinkedIn channel with a lot of guest-facing content, but employee-facing content, and then a lot of career stories.
When Clio said be very deliberate, I, I couldn't agree more because, we did something called Spill the Sake, which is a series where we essentially, you know, spill the tea, but Spill the Sake 'cause, we have mostly Asian concepts. We talk about what it is like, at TAO Group Hospitality to give that realistic job preview to show people who have grown through the organizational chart.
But it's also light [00:17:00] and fun and quick hit. And then not, it doesn't just land on LinkedIn. It goes on Instagram. It can go on TikTok. It can go through all the different channels that we do, but you have to be very deliberate in your messaging and think about who are you messaging to, not just some general, flyer.
, And so I think that's important for HR people to spend more time with their marketers in how you go about marketing to the workforce you want to attract.
Bruce Tracey: I love the narrative focus and being able to, to in fact control some of what you're trying to convey about what employment, you know, can be like and in fact be aspirational.
And especially highlighting many of the wonderful things about the industry that it offers from advancement to, really kinds of dynamic experiences that make you really feel like, gosh, this is a, a wonderful place to be. You both indicated that your roles now are expanding, a good bit.
Can you speak to some of the kinds of structural or other kinds of programmatic changes? Jake, you'd mentioned marketing is subsuming a great deal of your time and attention. What are some of the other things where you're, [00:18:00] finding yourself focusing to make sure you're either, authentic with some of the things that you're putting out there and making sure that you can be very consistent in the delivery , of a lot of your programming, but other things you're trying to do to move the dial and make sure that, people understand you , as the outstanding employer that you are?
Jake Basham: Sure. I think that the HR function has evolved so much over the last two decades and, now what I would think of traditional core HR issues might be 35, 40% of my week. The other issues could certainly be more commercially focused, how to help, strategically align a business, how to do goal achievement, performance management, how also to, help, managers with retention, recognition efforts, , and be more of an advisor in the business outside of just human capital than we've ever been before.
But as much as we're talking about marketing and fluff and culture and some of these other things, I think that the industry has to take a really hard look at how it compensates and rewards, team [00:19:00] members. You could have all the fluff in the world, if people can't make their bills, you have a problem.
And, one of the things that we did, and it was a strategic choice, at least for Tao Group, now granted, we're in the restaurant, and nightclub sector of the hospitality business, is we have benchmarked and done all of our compensation and total reward stack to that of the luxury hotel sector,
so that is unheard of in our market segment. We're in the 95th percentile of how we reward people within the restaurant space. We would probably be closer to the s- the 80th percentile in the hotel space. But we've essentially built our internal, total reward stack to match that of companies like Clio's, my former company, like Lowe's and the Hiltons and the Four Seasons of the world.
And that really gives us a leg up, on the competition. And yes, does it come with some expense and financial investment? It does. But what we've been able to do, Bruce, is we were able to take the talent shortage of the immediacy post-pandemic and show the value of spending that money and sustain that, over the course of the last [00:20:00] few years.
But I also think that, you need to look at some other unique things to do, such as commission-based earnings. And I know it's harder to administer and things of that nature. There are wage and hour implications, but we have to compensate differently. You need to create ways in which tip earners and lower hourly earners can drive up their revenue if they perform.
And so as much as we're talking about culture and all these types of things, people still work for money and bread, and we need to make sure that we hold up the end of the bargain on that.
Clio Knowles: Yeah, and I, I fully agree that compensation is definitely a challenge within the hospitality industry.
What I actually find is a lot of times the, hourly team members can often make more than the management team members because they are making overtime or they're making tips, they're making commission. We actually created a structure where our culinary team members can also receive a portion of the tips and, we have an extra charge that goes directly to the culinary team members.
And then the challenge that we have is then you move into management, and you're at a static salary. So we're also looking at creative ways of im- [00:21:00] improving that. But, back to your question of what other areas do we focus in, Bruce, one thing for us has really been the technology space and AI and how AI is going to impact the future workforce or how AI tools can simplify it from the corporate side at least.
I don't think that we're going to be the company that launches the first fully robot hotel in the US. I know there are a few robot hotels already in Asia, and I know some places in Vegas have experimented with robot cocktail makers and things. But for us, it's like finding that intersection between technology and humanity and where are we leveraging the best of it.
So I actually made a joke to my CEO yesterday that I needed to hire an HR person to do all of the traditional parts of the role, right? The employee investigations, making sure the benefits are there, all of those pieces. Because if you're really being strategic and trying to think three to five to 10 years ahead of where the industry's going, it's my job to think about that from a talent perspective, to think about that from a workload perspective, and so forth
Jake Basham: One of the [00:22:00] things that in my role as CAO I oversee our information technology division, at TAO Group. And so it's been a, a little bit of a learning curve for me to, turn myself into much of a tech nerd from a people HR nerd as I can. But , the amount of new change and disruption that's coming as a result of artificial intelligence cannot be overstated, at least from what I've seen from all of the major, , demos I've been in with the big players of Microsoft and Googles and, other ancillary companies.
But I, I also think that one of the things that we can do, in the hospitality sector, at least how we're looking at it, is we, determine how we want to deploy AI in our business. And this might seem a little bit weird to people, but we're looking at AI as a path to wellness. And what I mean by that is
it goes back to what are the key concerns we have? Management burnout, number of hours working in a week. So yes, while we want our managers to work more efficiently, how can we have them work less hours? Or how can we have them work more hours doing things that are inherently rewarding [00:23:00] for them, such as driving the guest experience, making sure the team members are taken care of?
So how can we deploy AI to simplify their administration, to get, , through their emails, faster, to make sure that their schedules are done, in a more efficient manner, with auto scheduling and different AI tools that happen from there. So we're not looking at it as a way to reduce headcount.
We're looking at it as a way to better keep the headcount that we have because, you don't get into hospitality and become, a restaurant GM or an executive chef because you love doing payroll every week. That's not an inherent value. There's an app for that. They, they
Yeah, it's not what you're in. You want to be creating. You want to be doing different things. You want to be selling wine. You want to be, doing all of these more exciting, initiatives. And so when we're looking at how we're deploying AI, that's the lens in which we're looking at it right now.
That lens could change, in two to three years, but the amount of time that we are spending in HR getting up to speed on technology innovation, as Clio mentioned, cannot be, overstated enough.
Bruce Tracey: I love it. Let's go down this path just a little bit. Sounds like both of you are, are [00:24:00] being purposeful about the ways you want to deploy technology, in this particular case AI.
Can you tell us a little bit about how that informs your choices about sourcing talent and the kinds of people that you may be looking to attract? And some of, Jake, as you mentioned, the ways in which you might deploy this to affect retention through, as mentioned, wellness or other kinds of channels that these kinds of tools may be able to lever.
So appreciate any insight you can speak on those, topics.
Jake Basham: I think that a couple, two, two and a half years ago when we deployed AI in talent acquisition, it was very novel, and we were front edge at the time. I think, most everyone has done it, to varying degrees now.
We made the strategic decision to put it on the front end of the funnel, but have as much human interaction in the talent acquisition process as possible because AI can't judge personality, can't judge vibe, and attitude, and tableside presence, and grit, and some of the things that we look for in our workforce.
So you know, talent acquisition was definitely the tip of the spear for HR AI. Now it's coming [00:25:00] into scheduling and workforce planning. We're in the middle of an AI implementation of a new scheduling tool right now that not only is meant to help our managers schedule faster, and more efficiently, it's also helped to drive more stability in the scheduling process.
One of the things we talked about was the volatility of hospitality. We're a spikes and valleys business, and that's very disruptive to people's lives. So one of the things that we're having our AI engine do on the back end is to look at our business forecasting to upload all of our revenue performance, our cover counts, all of those types of things to understand, whether it be weather, whether it be sporting events, whether it be the convention and visitor bureau calendar in our markets.
What are all of these things, and what is their impact on demand so we can stabilize our staffing schedule both for, optimization in terms of labor cost but also in terms of giving people a more, predictable work week?
Clio Knowles: I love that, Jake. That's awesome. We're looking at it from a slightly different lens of where my focus is on the AI side.
And we actually have an AI innovation [00:26:00] council, and we're, across departmental, so we've got operations, finance, IT people, et cetera, so that we're really coming at it from all angles. But one of the areas where we've been finding the most use cases for us at the moment is we're expanding globally pretty rapidly, and we're expanding into countries where a lot of the team members do not have English as a base language.
So we've been using AI to help us create trainings and translate them. So you can go to one of our online trainings, and using the dropdown, uh, menu, you can select which language you'd like to hear it in. And even here in the US where we're based in Miami, we have a lot of team members who feel more comfortable speaking in Spanish or Creole.
They can elect to go through the trainings in their language. And we're not having to spend hundreds of thousands of dollars to a translation company to reproduce this in the five different or six different languages. We've also been having a lot of fun using AI to actually create training. We've partnered with a company called Colossyan, and we can upload a PowerPoint or a PDF, and it will create an avatar that will do the training for us.
Definitely a lot of [00:27:00] fun to be had with it too. And my training team, think they're having too much fun sometimes. They're like, "Come see this. Come see this." They uploaded a photo of me, and like AI is animating my face. It's actually super freaky
Bruce Tracey: It's interesting what you guys just talked about. There's a question from Katarina Reece, she says, "Hey, guys. I'm right now in the phase of starting my own AI based hospitality startup." And we're right now talking about the right side to focus on for market entry. And the question is, using, guest information to determine demand, but also the employee side of the game. Are there enough of the right kinds potentially, to meet that demand? Can you just explain a little bit more about how you take into consideration those different data sources, especially, uh, when driving HR decision making?
Where does the guest piece come into this? And Jake, you mentioned, demand periods. Are there also preferences being incorporated here to help guide some of your decision making as well? Tell us a bit about that.
Jake Basham: Everything that we do is downstream from the guest. So how many guests are coming into our venues, what type of, experience are guests choosing to have.
So yes, there needs to be a handshake that occurs for, [00:28:00] in terms of AI between what we would call, a point of sale system, our POS in the restaurant and nightclub space, and also, , a CRM system, that we're in the process of, , revamping right now. And, , that is meant to, take data from our POS, transition it over into guest information, guest preferences.
Hotels have been doing this for, decades now, in CRM very well. It's much newer in the restaurant space. But we also have a lot of more micro data on guests and, down to the fact of does this person want caviar on top of their oysters, and like all of that type of stuff.
It's a much more detailed service experience than, say, which pillow you want to have in a hotel room. So everything that we do in terms of data starts with the guest, and then based upon that guest demand and that guest experience, we have to fill the gap with labor to, make sure we can satisfy that.
I would always start upstream with the guest experience, and then labor comes second
Clio Knowles: Yeah, I fully agree. I think to Jake's point, the guest experience is, is why we're all here. So, , if we don't have, the guests, we just [00:29:00] have really pretty buildings for us on the hotel side.
And training the team on how to use these tools. So we've got an incredible guest-facing app that, we try and get guests to download before they come and fill out their preferences form. But, I'm a big fan of Will Guidara, who talks about how one size fits one in hospitality. So you don't want to go to a hotel room and have a bottle of red wine and a fruit plate if that's not something that you get excited about.
So being able to put in your preferences like, "I like still or sparkling water, I like red or white wine, or I don't like wine at all." And then having the team member trained to go and make sure that they're looking at this information before your arrival. Or if you're in our restaurants, it's already noted that you have an allergy to fish, or you have a gluten allergy, and we ask you about that upfront.
I mean, we should be asking for allergies anyway, but isn't it nice if we already know and we're acknowledging it? Doing the same with celebrations. So somebody's coming to stay with us because it's their spouse's 40th birthday, making sure that we note that and we raise it and we celebrate it and offer opportunities for that celebration.[00:30:00]
So it really helps ease the team member experience if they have these tools to help make the guest experience better, to help enhance it, and then they're empowered to help bring that to life. So I think there's just so many ways that AI tools can be used for good and, getting more guest data to help drive the guest experience is definitely one of them
Jake Basham: One of the things that, can't help to think of, and I think it's important when we talk about just the state of the labor market and the industry, is we really need to be tripling down on retention.
What I mean by that is, we spend so much time thinking about talent acquisition and how can we acquire and attract the right talent. If we're not thinking about retention twice as much as talent acquisition, you're never going to catch up. You're gonna be, uh, constantly on a treadmill.
I'm sure Cleo has several examples. , I have several as well, where we've really changed how we onboard, how we view training. Like the old adage of talent churn, is no longer doable,, in the operations in [00:31:00] particular. The guest experience suffers, the team member experience suffers, particularly when teams are lean to begin with.
So I would say that turnover reverberates so much harder in the organization than it used to. And, one of the things that, we've done is we've created much more extensive onboarding and training plans, and that was a change management process we had to go through with our operators.
They're so used to hiring someone, HR turning them over, and then throwing them right on the floor, and that can't happen anymore. One, we do a thousand covers a night at Tao Vegas or Tao Downtown. That's like, "Welcome to, your crazy experience, and then go die."
It's really insane. But we have to slow down and be more deliberate about training. When she mentioned about how AI, can help train and, bring more training content together, I don't think that training can be talked about enough in the context of the workforce, particularly when we're looking at people who are coming into the hospitality industry for the first time we're having to, expand, what would be an acceptable candidate.
Not every candidate [00:32:00] can have two to three years experience in every single role, as the talent pools have gotten more shallow. And therefore, companies are forced to invest more in training and retention in general. And what I mean by retention isn't just how you onboard, isn't how you train the job.
How do you constantly keep a workforce connected to the broader business? Yes, that is through recognition. I think it's through, more importantly through internal communication and building a sense of community. We've invested a huge amount of time and dollars in internal communications, , within Tao Group.
I selfishly think, , we do it, among the best in class in the industry, but obviously I have a biased perspective. But we have a very social media-heavy workforce. Once again, it skews younger. So we've created this internal platform, for them, and it looks like us. It feels like us.
The energy through our workforce and our venues comes through, on the feed and everything else. And so I think that as HR leaders, you have to really pause and think about why are people continuing to work for you? How can you keep them more [00:33:00] sticky in terms of talent, so you don't have to go back and search again?
Clio Knowles: Yep, I completely agree. And, I know you had shared that you have, pretty historically low, turnover numbers for your industry. I don't know if you want to speak to that before I steal your thunder.
Jake Basham: We have, restaurant industry around 80%. We run 37 at TAO, so, uh, less than half.
Clio Knowles: Which is incredible. We're at about the same in terms of turnover, which is also very low. Uh, not quite as big a gap, but usually the hotel industry's in the high 50s to 60s. We're also at 37, and I think that a lot of that comes from a lot of the things that Jake just spoke to. I want to build on what he said about training because, yes, entry-level job training is so important, and we, I think we used to always leave it to the managers or directors of the departments to handle, but it is very important that we're thoughtful and deliberate and help them structure what that training's going to be.
It has to... the people team, in my opinion, have to at least be involved in making sure that's actually happening. Otherwise, to Jake's point, it's like The Hunger Games at the nightclub. But for us, it's also about the leadership training because what we do find is we do a lot of promotion from [00:34:00] within, but just because somebody was a great bartender doesn't necessarily mean they're gonna be a great bar manager.
So about four years ago, we rolled out a leadership program, a leadership training program, and we have six core modules, and then we have another 12 sort of additional add-ons. But, training leaders on some of the basic skills that are not necessarily basic because they may not have learned those in their prior roles, and we can't assume that just because their title says manager that they already know it.
So things on how to communicate, how to give performance feedback, how to have difficult conversations, how to lead with curiosity. And we say curiosity because we don't want to just have, everybody say, "Okay, well, they were late five times." Well, why is this employee suddenly late? Have you asked them if there's something going on at home?
So, really giving those leaders the skills to manage team members and, and to be representative of the organization. And to Jake's point also, community and communication are just so critical, and making sure that you're communicating with the team members. And going back to what we were saying about marketing, that's where involving the marketing team has gone a long way for us on our internal [00:35:00] platforms, making sure that we're sharing what we're sharing externally, that we're sharing it internally too so they can celebrate the successes and get as excited about what we're building as we might be.
Bruce Tracey: It sounds like in fact you're flipping the script a little bit in, instead of using, for example, learning as a mechanism for people to get better- Mm ... it's a really almost a reward for, hey, look, come be a part of this and grow with this and we're gonna give you a ton of experiences and resources to, enhance your professionalism.
And is that sort of again getting it back, , some of those changes in terms of the mindset of the workforce that they wanna feel more sense of meaningfulness at work, and this is one of the, levers you're pulling?
Jake Basham: Certainly. I think that people in general, like, everyone's unique.
You have some people who get into that job and they just wanna do that job for 30, 40 years. But I think that that's far more the exception, , than the rule nowadays. I think people wanna feel a sense of purpose, and a sense of purpose that they're heading towards something, that they're growing towards something.
And, I'm happy to hear, what Cleo and her organization is doing. We're [00:36:00] undertaking very similar initiatives, a little bit different, in terms of doing it from a nine boxing and a high performance, high potential standpoint. But also, taking people, from, the center of our org chart and getting them a lot of exposure to the more senior level leaders, in our organization, upwards to our C-suite.
I think Cleo mentioned the mentorship program and things that they've done at Starwood. We've tried to do, a similar vibe, with what we call the Tao Leadership Experience, where we take those people that are high performers, high potential people we do not want to lose in our business, and we want them to feel connected into the most senior level leadership of our organization, one, to build relationships, two, to make sure that they feel seen, and three, to school them on every aspect of Tao's business because we want them to take on future and larger roles.
And it's been very successful. We've had a, a 95% retention rate over that, population in two years, so we're gonna keep it- Yeah ... keep it up.
Bruce Tracey: That's amazing. So let's look to the future a little bit and expand the conversation to consider the ideas [00:37:00] of, of innovation and what you're thinking about in terms of new and creative over the next, let's say, 12 to 15, 16 months or so.
And it- is it in response to some of the competitive dynamics we've been talking about, or is it just looking internally and saying, "Here's some things that we know we can improve upon in terms of our own policies, practices, and programs"?
Clio Knowles: So I think innovation is kind of a catch-all for many, many different things. It doesn't necessarily have to mean technology and, the latest and greatest AI tool. For us, the way we're looking at innovation is we're actually launching an innovation profitability challenge. And we believe that the people closest to the work are the ones that often have the solutions to issues that we're seeing.
And so what we're doing is we're launching kind of a Shark Tank style competition at all of our hotels, and then they'll have a judging panel at the local hotel and the top two or three from each property will then present to the corporate team, and the best ideas will be actioned. We did this just at one hotel, South [00:38:00] Beach, two years ago, and our, VP there shared the other day that it's brought in over $750,000 of additional revenue, the idea that was the winning idea that they took.
And there doesn't have to be one single winner. They might all be winners. And it might not always be about improving profitability, it might be about saving money and maybe somebody seeing a, a place where there's a lot of loss. So for us, innovation also is about involving the team members in, the next cycle of the company and what ideas do they have for us to help grow and retain as well.
And, when you were talking earlier about the purpose of the company, for us it's very clear. The Starwood Hotels motto or purpose is improving the planet one hotel at a time, which is very broad for our sort of three brands, but that's really the approach that we consider when , we're doing an initiative or what, what countries we're moving into.
And for one hotel specifically, it's do all the good you can and be a platform for change, and that mission is what draws a lot of people to join the organization because they know that we're focused on being a sustainable organization, that we're [00:39:00] nature driven. And they come and they wanna be a part of our pay it forward where we, at least once a month have different initiatives with the team members where they can go help clean the beach or if they can't get, away from the hotel, we also have things that we do in the team member lounge like putting together, packs to give to the local homeless shelter.
In our rooms for our guests, we have something called the One Last Thing program where there's a little wooden plaque, and if they have an extra piece of clothing that doesn't quite fit right, they can leave it behind, and then we take those and donate them to a local charity. But we also do that for our team members, where our team members will bring a thing, an item that's lightly or unused from their closet, and then we set it up in a ballroom and have our other team members go shopping there.
So these may not be things that,, Fast Company magazine would consider innovations, but for us it's those touch points constantly with our team members. How can we improve their lives? How can we help improve, the broader communities that we live in? And that's the, angle that we come at that from
Jake Basham: I think I've touched on a number of the things that we're doing in terms of technological innovation. But one of the [00:40:00] things that I would like to push us on, and it's almost anti-innovation, is to get back to the roots of, people-to-people communication and connection. One of the things that, we're looking at is, we're really defining what we call our guest journeys for the purpose of CRM.
What is the life cycle of a guest at TAO Group, whether it be a restaurant guest, a nightclub guest, and things like that. Where I wanna take that is what is the life cycle of an employee experience at TAO Group? And one of the things that we've seen is if we can get someone from, month one to month 12, that person becomes four times more likely to hit five years than if we can't get them through that first 12 months. Like, they become sticky between months 11 and 13. And so really breaking down that employee journey, old school, Sure, you have turnover data and stuff like that, but, talking to staff, what is the difference between someone who left and someone who stayed?
The old school exit interviews, the stay interviews, things like that. Doubling down on human connection. Data's great. Technology's great. But [00:41:00] sometimes, it can be, devoid of meaningful action and connection. And, I'm sure Clio has, 80 million examples like I have where you take someone on an exit interview who's leaving and you don't want them to leave, and you r- unpack the reasons why they're leaving, and it was a miscommunication or, one single negative interaction, and then you're able to bring that person back.
And so as we become so technology-dependent, particularly those of us in HR can't, forget what the H stands for in HR, and make sure that we're talking to our staff, our team members, and our leaders. And so in a weird way, Bruce, while we're in this hyper-speed of innovation and technology, some of the most innovative things that we can do are the actually the anti-innovative things.
Bruce Tracey: I love that framework and certainly reminding us of some of the fundamentals that we sometimes forget about that need to be in place for us to be effective. I appreciate that reminder. One thing we haven't talked about, and this is a slight digression off the topic, but it comes back to what we talked about initially regarding, [00:42:00] scarcity.
"How does relying on the local workforce compare to using J-1 or J-2 programs, especially as more companies turn to these options in response to the US labor shortages?"
Jake Basham: I think it goes without saying that, immigration has become a more challenging space under this current administration, for our industry.
H-1Bs, which used to be something that was very, heavily used, in our industry now comes with a $100,000 price tag. And a lot of those roles are priced out. I actually think depending upon how the political scene plays out, that you're gonna see less, usage and reliance on international and international workforce.
And candidly we're lucky. All right? What I mean by that is our two largest US hubs, are in two, huge, economic centers for hospitality, one being Las Vegas, where the entire economy is essentially hospitality dependent, and the other in New York. And then you have LA, Chicago, and Miami, and some of these other markets.
So based on where we're at, we don't have to deal with some of the [00:43:00] labor shortages that occur in secondary and third tier markets, thankfully. I don't think that you're gonna see a, a TAO Restaurant in Des Moines, Iowa any- anytime soon. It's not really our demographic. But, in fairness, I don't envy those leaders that have to, work in some of those markets, because the labor pools are significantly, shorter.
But at least for we've seen a drawdown on the usage of our international, visas and workforce, over the last couple of years. I think it'll continue that way for the next couple of years
Clio Knowles: I agree. And, we definitely wanna hire locally wherever that's possible.
I actually have a relocation company that keeps trying to get me to do business with them, and I'm like, "We just don't have that many people that we relocate," 'cause we wanna hire in the local neighborhood, the communities. That being said, we do have properties in some remote locations, and we do have a J-1 program for some of those, and we, build employee housing, et cetera, because they're just not in a center where there are a lot of people living.
When it- there's a shortage of talent, we have to develop that. But what we've done with our J-1 program, because that is a management and training [00:44:00] program, we try and hire from countries where we also have hotels. So after they finish that, we see it almost as an internship program, then they go back to those countries and work in our hotels in their local countries.
So we see it more as a talent pipeline for our international expansion. We certainly always wanna hire local and within the local communities where we can because, that's what we're here for, is to be a part of the community, not to try and, impose ourselves on a location.
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