North American hotels are experiencing record revenue as the economy continues to grow. In January the U.S. added 200,000 jobs, according to the Bureau of Labor Statistics. In fact, the U.S. economy experienced job growth for 88 months in a row, according to a report by NPR. But there is a downside of all this economic growth. Wages in the hotel business are rising faster than rates, which potentially cuts into margins.

Mark Woodworth, senior managing director of CBRE Hotels’ Americas Research, tells Business Travel News that hourly employees are seeing their paychecks rise. Woodworth claims hotel operating expenses must stay below 3.7% to ensure rising profits. Unfortunately, that is not the case for many properties. “With the average hourly compensation rate for hospitality employees currently increasing at a pace of 4.1%, and labor costs comprising roughly half the costs of hotel operations, you can see how the math becomes challenging,” Woodworth said.

And highly skilled labor costs even more, according to David Berson, SVP and Chief Economist at Nationwide Insurance. “The faster pace of wage gains indicates that the labor market is tightening, with employers having to pay higher wages to get the workers they want,” he told USA Today.

If hotel operators can’t avoid the higher cost of labor, they will have to find other ways to maintain existing profit margins, such as lowering operating costs by switching to modern, more cost-effective technology. One of the best ways to impact a hotel’s bottom line is by switching to a cloud-based property management system.

An Outdated ‘Premise’

A modern, cloud-based Property Management System (PMS) is often more cost-effective than older, premise-based technology. The cloud eliminates the need for costly, upfront hardware expenses and software licenses, as well as ongoing maintenance expenses related to equipment that could fail or become outdated. With today’s modern PMS platforms there no need to hire a costly IT professional to maintain or repair the system since a cloud-based PMS, such as the SkyTouch Hotel OS®, is always up to date and can be viewed through any device with an active internet connection.

Mobile Property Management

One of the most convenient benefits of a cloud-based PMS is the ability to manage a property from almost anyplace at anytime. This allows an owner or GM to manage rates or arrange housekeeping schedules from home. Plus, management and owners have access to hundreds of reporting features remotely.


With a cloud-based PMS such as the SkyTouch Hotel OS®, it is simple to connect to every piece of technology you rely on to operate your hotel. For example, hoteliers can utilize an Energy Management System that uses automated temperature controls to lower heating and cooling costs while guests are not in their room. A modern PMS should allow you to manage key areas of technology that are revenue drivers for a hotel. Managing guest Wifi, in-room entertainment, and room service should all be easier and less labor intensive, which lowers costs and earns an operator more money.

Yes, labor-related challenges threaten to weigh down the typical hotel’s bottom line. But by partnering with the right technology partner, such as SkyTouch, these new ways to control expenses reveal themselves even as wages continue to increase.