TFG Asset Management's white paper launch in collaboration with the Emirates Academy of Hospitality Management "The impact of staff turnover on a hotel's Income Statement"

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27/02/2017 - Hospitality

TFG Asset Management is excited to announce the recent launch of the new white paper on staff turnover – an alarming issue in the UAE – and analysis of its impact on a hotel’s Income Statement. The paper has been carefully analysed and written with the Emirates Academy of Hospitality Management.

It is revealed that the benchmark for employee turnover in the UAE’s hospitality industry is approximately 25% - 30%. Employees, particularly entry level, are willing to change jobs for a marginal pay rise, raising costs for their current employer when sourcing a replacement. Recruitment and ongoing costs include visas, accommodation, staff meals and training. Loss of intellectual capital and potentially business partners, constitute intangible costs. This translates directly to monetary loss in both the top-line and bottom-line, although there has been a lack of research to support this. Hoteliers continue to focus on strategy and guest service, overlooking the issue of staff leaving the organisation. The curiosity to translate into financial terms motivated TFG Asset Management to conduct this one-year research. After having gathered the necessary data and information required to develop our simulation, we can now, confidently quantify a significant, negative monetary impact on a hotel’s Profit & Loss. Our simulation shows that a 30% turnover rate can cause a 22% loss in revenue and a 9% decline in the Average Daily Rate, ultimately leading to 37% reduction in Gross Profit.

“Staffing is always a problem in the UAE, especially now when we expect new supply in the run-up to EXPO 2020” – commented Mariano Faz, Head of TFG Asset Management – “The market makes it easy for staff to jump from one property to another, staff loyalty is also deteriorates easily. Another problem is that hoteliers seem to overlook this matter, and ignore the need to craft strategies to retain top talent. Our research aims to evaluate this impact of staff turnover as well as to suggest strategies to combat this problem.”

To further read the full research, please click here.