THE INFLUENCE OF EMPLOYEE TURNOVER ON THE PROFITABILITY OF A HOTEL

Abstract

In most hospitality companies, employee turnover has become a big issue. Human resource managers, on the other hand, are working tirelessly to find ways to reduce employee turnover. The study’s major goal is to find out how employee turnover affects the profitability of the Radisson Blu Sky Hotel.

Because the hospitality industry invests a significant amount of money in training, development, and retention of its employees, it is critical for them to minimize costs by reducing employee turnover, as they rely on their employees to be more successful in the job market.

The research employed a descriptive research approach to collect both qualitative and quantitative data on how employee turnover affects hotel profitability. A total of 50 employees were included in the sample, and 44 replies were obtained.

The study used stratified sampling, which divided the target population into two Strata: low-level personnel and middle-level staff. Closed-ended questionnaires were utilized in the quantitative research approach, and the obtained data was processed using MS-Excel and presented in the form of tables and graphs.

The qualitative research method will be used to assess the data collected through open-ended questions. According to the conclusions of the study, the hotel had a high rate of staff turnover.

Employee turnover, according to the majority of respondents, has a significant influence on profitability.

In addition, the majority of respondents believed that the hotel’s established initiatives will reduce employee turnover. The high turnover rate of personnel had a detrimental impact on hotel efficiency because the majority of skilled and highly productive staff were gone, and it took time to find new employees, resulting in increased training and recruiting costs and a decrease in profitability.

Employee turnover has been linked to a lack of motivation, which has prompted many staff to leave the hotel in search of positions with higher pay and benefits.

Poor working conditions, employees’ lack of the essential training to become more productive, poor salary wages with no motivation packages, unhappiness with management, and supervisor unfair treatment were all issues that harmed the hotel’s profitability, according to the study.

The study recommended that the hotel management should employ strategic strategies such as increase the pay scale of employees, providing a stimulating working environment, and continue using 360-degree feedback.

CHAPTER ONE

INTRODUCTION

We live in a constantly changing world that has an impact not just on the hotel business but also on the people who work there. Human Resources Management plays a critical function in managing the enterprise’s capital.

Employees are a valuable asset in the hospitality industry, and the sector’s success is totally dependent on the efficiency of its employees.

Human Resource Managers are now facing a major difficulty in retaining employees for extended periods of time and lowering employee turnover rates.

Employee turnover has a greater negative impact on the hospitality business since employees are the primary tools used to generate and provide services from the hospitality company to clients, which directly affects profitability. When a business incurs costs to train and induct new staff, profitability suffers in the hospitality industry.

Hospitality is one of the world’s fastest-growing industries, accounting for more than a third of the service industry (ILO, 2010 cited in Bharwani, 2012). Despite the fact that the Covid 19 has changed the situation in the tourism sector, the study is still relevant following the tourism rebound.

The service industry model was accepted here: intangibility of resources, inseparability of output and usage, and heterogeneity between consumers and service providers (Kusluvan et al., 2010). The hospitality business, in particular, places a high value on the human component and direct client contact.

2.2 Research Problem, Objectives, and Questions

2.2.1 Research problem

Employee turnover has a negative impact on an organization’s efficiency and profitability, as it depletes a variety of financial and intellectual resources and assets (Hofhuis, Van der Zee & Otten, 2014).

The main issue with employee turnover, according to Maxwell (2010), as mentioned in Nyaga (2015), is that the organization loses the most knowledgeable and skilled individuals in whom the company has lately spent in preparation for various operational duties.

Employees are valuable resources in every firm, and managers must make every effort to keep their most valuable employees from leaving. Tallinn’s hospitality business is labor-intensive, and the success of its operations is largely dependent on its staff.

However, it is recognized that such a high rate of staff turnover results in the loss of skilled and important individuals, which has an impact on job performance. Customer unhappiness, low employee morale, decreased productivity, low service quality, unfavorable business acumen, decreased work performance, high turnover expenses, and finally poor hotel performance are all consequences of this. These impacts typically result in a loss of market share, fewer sales as a result of client unhappiness, and companies begin to lose money rather than gain it.

This has resulted in a major knowledge gap regarding employee turnover management. This study seeks to fill a gap by examining the effects of staff turnover on organizational profitability. Successful instructions on how organizations can lower worker turnover rates and generate greater benefits have an impact on the results obtained.

In this context, the researcher wanted to look into the influence of employee turnover on profitability, using the Radisson Blu Sky Hotel in Tallinn as a case study.

2.2.2 Research Objectives and Research Questions

The main objective of the study is to investigate the impact of employees’ turnover on hotel’s profitability and to give recommendations on how to decrease the impact, a study of Radisson Blu Sky Hotel in Tallinn.

More specifically, the main research objective shall be guided by sub-research questions of this study;

1. What factors contribute to employee turnover?
2. What are the impacts of employee turnover on hotel profitability?
3. What strategies can be recommended to minimize employee turnover in hotels?

further reading: The Effect of Employee Turnover on Hotel Profits: A Test Across Multiple Hotels