3 Ways Hotels Can Manage The Cost of Payroll

29th August 2018

Running a hotel is an expensive business.

A survey by the Recruitment and Employment Confederation (REC) revealed that hourly pay rates for short-term hospitality staff rose for the 62nd consecutive month.

CV Library also discovered that hospitality workers have the fastest-growing pay packets of any other sector, with wages rising by 10.4%.

Hospitality pay is not just getting more expensive, but it’s getting more complex.

HMRC has been tasked with fighting for workers’ rights when it comes to pay, and has been flexing its enforcement powers. 23% of the businesses that were named and shamed for unfair pay last year were hospitality businesses.

The economy has been seeing a considerable shake-up too. Brexit and the introduction of the National Minimum Wage have added more administrative burdens.

Some hotel franchises have multiple locations with payroll cycles occurring at different times. Managing a business-wide payroll team for multi-location businesses is as much a logistical challenge as a financial one.

Hotels have seasonal or zero hours staff, weekly paid employees and monthly paid staff. The diverse nature of hotel staffing requires multiple payroll cycles, team differentiation, and multi-shift organisation. So many variables mean that payroll is much more complex.

So, what can hoteliers do to tackle rising costs and ever more complex issues?

1. Audit your payroll & HR processes

Firstly, make sure your house is in order. This means undertaking a full review and assessment of your internal HR and payroll processes. Make sure that your processes are up to date and still fit for use. Don’t keep anything you no longer need and streamline your process flows.

Make sure you have processes to ensure employer and employee compliance with HMRC and The Pension Regulator. Structured processes also help you to ensure accurate and timely data processing.

Many hotels are chains with a number of premises dotted around the country. This means that payroll information can likewise be spread out. When data is sitting in various sites and systems, centralising your payroll operation can result in huge time savings.

Regardless of whether your payroll teams are centralised, as long as they have access to all the data they need, when they need it, your operation will run much more smoothly. One secure data site also ensures greater data security, as it allows you to have closer scrutiny over access.

These processes, if adhered to properly, will make sure that you do not fall fowl of any regulations and that your employees get paid on time. Compliance to regulations means no fines, while paying staff on time is a vital part of ensuring productivity from staff.

2. Keep up to date with compliance

You would be surprised just how far reaching some compliance changes can be. As we have mentioned, Government changes in legislation and compliance have already had a major impact on hospitality payroll.

That’s why it’s so important to keep an ear to the ground and be aware of changes. This gives you time to get a process in place and a budget organised so you aren’t caught out.

When you work in an industry that subject to constant change and upheaval, having a robust, yet flexible foundation is a must.

Efficient process flows and readiness for change are the best ways to ensure cost effective and efficient use of your HR and payroll resources.

The hotel industry faces a number of unique challenges when it comes to payroll. As businesses that can be single or multi site, and have a variety of payroll cycles, hotels must work hard to ensure that payroll is accurate.

Overpayments and similar errors are common in businesses using traditional systems. The nature of hotels, with peaks and troughs around key dates and social events, holidays and business meetings, means that payroll teams face sudden flurries of extra work all year round.

3. Invest in skills and tech

The majority of employees in the hospitality sector are paid flexibly and often work in several locations within the same pay period. These factors can make running accurate payroll more of a challenge.

There is also usually a high turnover of staff in hospitality businesses. This means you have to constantly update your payroll.

For these reasons, you cannot expect a general manager, whose main focus is their customers, to be an expert in payroll.

You need to equip your business with fully qualified, experienced payroll staff who know what they are doing and who are able to focus on getting your employees paid. They also need to have the right tools and systems in place to make their jobs easier and to ensure accuracy of data.

Early investment of payroll infrastructure will always pay off in the longer term. The question is: which solution is best for you? Some hotels would be better with an outsourced solution, while others simply need support to get the work done.