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Metro hotels reel under rising attrition, escalating wage bills

Five-year forecast: Wage bill up 40%, attrition growth at 10% per annum

Bhavika Jhaveri - Mumbai

Metro hotels around the country are presently reeling under the ever rising attrition rates that are currently at 18-25 per cent per annum, but growing at the alarming rate of 10 per cent per annum. Coupled with this trend of high staff turnover is the increasing pressure on bottomlines as the wage bill continues to escalate at the rate of 10-12 per annum with a five-year forecast pegged at a minimum increase of 40 per cent over current levels.

In effect, even as there seems to be no end in sight to these rising attrition rates, the wage bills might come close to international levels which will nullify the 'cheap labour' option that Indian hotels use to their advantage today, according to industry sources. Coupled with the increased room inventory that will be available in the market five years from now, this forecast gains even more significance as the hotels will be unable to charge the existing room tariffs. Therefore, the expected overall wage bill increase of around 40 per cent will put huge pressure on the hotels' bottomlines, industry analysts reveal. Adding fuel to the fire, most GMs and HR heads in hotels across Chennai, Bangalore, Delhi and Mumbai confirmed that while attrition levels remains at 18-25 per cent per annum, the real picture is far more grave.

While in departments like accounts, HR and administration, kitchen stewarding and engineering, the attrition rate is minimal, in key operational areas like food & beverage, sales and marketing, front office, housekeeping etc, the employee turnover goes up to as much as 80 to 100 per cent. Sanjeev Oberoi, VP-operations, Orchid Hotels, Mumbai, says, "Majority of the hotels in Mumbai are experiencing 100 per cent turnover in key functional areas, which does affect the bottomline, as the cost of attrition is high. We are interviewing F&B or front office assistants almost every week."

Reiterating the same, Sandeep Mathur, HR manager, The Park, Chennai, says, "At the junior level, the turnover has been around 40 per cent, while mid-level management is around 25 per cent and senior level is at 5 to 10 per cent." The real culprits for the mass exodus in the hotel industry are an assortment of service industry competition like cruiseliners, retail industry, BPOs, real estate, and overseas exposure in the Middle East, London and Europe. Sudeep Luthra, manager (HR) Taj Palace, Delhi, says, "People want to move vertically upwards due to the surge in hotels and emergence of budget hotels. Attrition should double up in the FTC (fixed-term contract) category." With the rising attrition, the wage bills have also taken a beating, with executive and managerial salaries going up three times as compared to the salaries of the rank and file staff. "Till last year the wage bill was around 14 per cent, this year there has been a two per cent increase in the wage bill as a percentage of turnover," says Rohit Khosla, GM, Taj President, Mumbai.