7 Hospitality Industry Challenges and How to Solve Them with Deel

The difficulties that the hospitality industry faces are many, from high labor costs to delivering high-quality customer experiences. Traditional business models are also being forced to innovate to compete with new alternatives like AirBNB, ridesharing, and app-based food delivery.

Hospitality was one of the sectors hit hardest by COVID-19 due to stay-at-home orders, and many companies are still reeling years later. The good news is that tourism and travel are coming back strong, meaning many hospitality companies that have shown resilience thus far are poised to surpass their pre-pandemic numbers.

But that doesn’t mean it will be easy. Since 2019, many businesses have been forced to shutter their doors, leaving a highly competitive market in their wake. To succeed, those left need an edge over the competition to stay ahead after each new hurdle.

Let’s dive into seven of the biggest challenges facing the hospitality sector today and explore ways to solve them.

Labor shortages

According to SHRM and Indeed, the average company spends a minimum of $4,000 per new hire. This highlights not only the unseen costs of acquiring new talent but also the importance of employee retention strategies.

Deel’s employee-friendly payroll and HR system offers perks for workers that your current provider almost certainly does not. From our handy employee payroll portal, which allows users to track their benefits and customize their payday, to HR tools like career pathing and our AI-powered Learning Management System (LMS), Deel puts workers in the driver’s seat of their earnings and success. This not only makes for happier and more engaged employees but also attracts new talent.

Additionally, services like Deel EOR and visa support allow hospitality businesses to hire and relocate talent from anywhere in the world. Unlocking this potential is a game-changer, whether hiring for remote work or reaching international talent pools and immigrating skilled workers.

🔎 Learn how to leverage an Employer of Record for Global Expansion and Market Testing.

Staff retention

Staff retention is more than just keeping your current team happy. It starts at the hiring stage or possibly even before that. You want to provide a good employee experience every step of the way.

The only thing worse than losing a good employee is wasting resources on a bad hire. Gaining access to top talent is invaluable for your company’s long-term health, but only if you can effectively hire and onboard them.

The Deel platform offers easy background checks, workspace memberships for new hires, and even equipment management to ensure everyone has the tools they need to succeed in their role. This is in addition to our top-of-the-line Learning Management System and self-serve features like pay flexibility, Deel Card, and so much more.

⬇️ Download our free Guide to Standardizing Global Expansion for Enterprises to streamline your multinational expansion efforts.

Rising operational expenses

Inflation makes everything more expensive, which is a double-whammy for the hospitality industry. Not only do costs go up (such as wages, supplies, and other business expenses), but your clientele also has less money to spend in most cases.

You can’t simply increase your prices to match increasing costs without potentially losing some frugal customers. Over time, this cycle can really put a squeeze on your business, leading to empty tables in your restaurant or empty rooms in your hotel.

To offer competitive pricing while combating inflation, you need to reduce operating costs. Automating core functions like HR, payroll, and compliance does just that. By improving operational efficiency, you save your team valuable money and man-hours that can be used elsewhere to reduce the effects of inflation. Deel Integrations is a perfect example of streamlining processes on popular apps you are already using.

Seasonal fluctuations

Navigating the hospitality industry’s seasonal shifts can be a formidable challenge. These changes could stem from weather-related seasons, spikes in demand during holiday periods, or industry-specific “peak seasons.”

For many services, you’re locked into rigid pricing or markups during these high-demand periods, which can be difficult to forecast accurately. Furthermore, you’re faced with the task of adjusting your labor force accordingly. Overestimating your needs can lead to unnecessary expenses while underestimating can leave you ill-equipped to meet customer expectations.

Deel’s platform is designed to dynamically align with your fluctuating supply and demand. Need to ramp up your workforce with additional contingent workers for the peak season? Consider it done. Interested in converting some of these contractors into full-time employees? We make it seamless. And if you need to scale back in certain departments, our platform ensures compliant terminations.

Our team, comprised of experts in payroll, HR, and compliance, functions as an extension of your own. We’re here to take a step back during the slower periods and proactively step in when the pace picks up, ensuring you’re always perfectly positioned to handle the ebb and flow of the hospitality industry’s unique demands.

Communication gaps

The hospitality industry presents a lot of challenges when it comes to internal communication. Hospitality tends to rely on a lot of different departments, such as management, food preparation, customer interaction, and health and safety.

Ensuring such diverse teams of employees all receive the HR support they need is no small feat. You may have a combination of salary workers, hourly workers, seasonal roles, temps, union members, and non-union employees, all with different contracts and benefit packages. Maintaining proper communication and compliance takes a lot of bookkeeping.

Deel HR helps you manage your entire global workforce across all departments, simplifying and automating your payroll. Deel Plugins reduce context-switching for management while also seamlessly integrating with communication software like Slack. You can even use the Deel platform to contact employees directly, creating easy avenues for delivering upward, downward, and interdepartmental feedback.

Multiregional compliance

Hospitality is one of the most likely industries to go international. Whether it be hotels, restaurant chains, or tourism agencies themselves, many of these businesses face the challenges of operating in multiple jurisdictions.

Obeying business laws and regulations gets exponentially more complicated as companies establish themselves in more countries. From business licenses and employee rights to taxes and currency exchange, international operations are not for the faint of heart.

Fortunately, Deel’s Compliance Hub takes the headache out of running a multinational company. It makes international hiring decisions, worker classifications, and contract negotiations effortless. In addition, the compliance monitor scans for regulatory changes across 150 countries to keep you out of trouble and even provides monthly workforce insights to help you make strategic business decisions for the future.

📖 Read our guide on Compliance Challenges Companies Face When Growing Globally.

Cybersecurity threats

In addition to the minefield of international business law, Deel offers protection against those actively seeking to harm your business, namely cybersecurity threats.

As you can imagine, we take data security very seriously when handling payroll for thousands of companies around the world. One data breach could seriously hamper our clients’ day-to-day operations.

For this reason, we don’t cut any corners when it comes to cybersecurity. Deel adheres to the strictest data security and risk management standards in the industry. Our advanced infrastructure, comprehensive compliance certifications, and devotion to user safety are second to none.

Overcome challenges in the hospitality industry with Deel

Succeeding in the hospitality industry is a careful balancing act. Not only do you need to predict customer demand, but you also have to juggle the needs of your various departments to ensure your organization operates like a well-oiled machine.

By allowing Deel to take some of those needs out of your juggling act, you can significantly lighten the load of your operation and improve efficiency. Remember, Deel is more than just payroll: We offer comprehensive HR services, including cutting-edge LMS, workforce reporting, and visa support.

For hospitality companies, partnering with Deel gives you the tools you need to run a lean and mean operation that is not only more profitable but also increases your potential for growth anywhere in the world.

And that’s just the start.

Speak with a product expert today to discover how Deel can address the challenges facing your hospitality business and take it to the next level. Book a call now.