Staff turnover and its effect on a hotel’s financial performance

« Back SHARE:
12/03/2017 - Hospitality

TFG Asset Management is happy to announce its recent column featured on HospitalityNet, titled “Staff turnover and its effect on a hotel’s financial performance”.

The column is extracted from our recent study launched in collaboration with the Emirates Academy of Hospitality Management. Based upon a hypothetical simulation, it quantifies the potential monetary impact that results from experiencing 30% staff turnover – which is the hotel market benchmark in Dubai. The main takeaways from the scenario are applicable on a larger scale, highlighting that staff turnover has a negative effect on the top-line – roughly an AED 8 million loss, with a positive effect on the tangible expenses but a negative impact on those which are intangible. Ultimately, this translates to a loss of approximately AED 6 million in the Gross Profit Margin.

General hotel performance indicators also experience a decline, with the Average Daily Rate indicating a 9% fall, while room nights sold decrease by 14% and consequently, lead to a drop in room revenue. On the expense line, there is only a minor savings; however the margin is significantly higher than under a low staff turnover scenario. This reduction in cost cannot offset the loss in the top-line.

“Our research results from one year of hard work and dedication.” –Mariano Faz, Head of TFG Asset Management recalled –“Our hypothetical model is based on a collection of relevant, updated, secondary data as well as our field research.”

You can now view the full column on HospitalityNet.