Staying in control of labor costs: how to limit losses

🌞 This sunny month of August, we shine a spotlight on one of the major challenges currently weighing on hoteliers’ shoulders: labor costs. While the pressure is not new, it is intensifying at a worrying pace.

In hospitality, labor remains the number one expense. And even though technology enables certain efficiency gains, there is still no real alternative to a human presence for many tasks—nor to the famous “human touch” that our guests seek.

Since 2023, labor costs have risen faster than hotel revenues, and in 2024 gross operating profitability fell by a further 1.1 percentage points. Concretely, for every ariary of additional revenue generated, 0.75 ariary was absorbed by the rise in wage costs—and that is without even accounting for other rising expenses.

Added to this are new regulations, such as productivity-planning laws, which further increase the burden of managing teams.
All of this in a context of talent shortage, where recruitment and retention are becoming strategic challenges.

🎯 So what can be done to preserve profitability?

Owners and asset managers must now take back control:

• Optimize schedules based on actual demand,
• Re-examine staffing levels in light of performance by segment,
• Automate back-of-house functions where relevant,
• And above all, ensure that every technology investment generates a measurable return.

In an unstable regulatory environment and with costs that keep climbing, controlling the wage bill can make the difference between a profitable hotel… and one in difficulty.