Michael Hraba is a partner at Waterford Hospitality, a full service hotel management and consulting firm with properties across the western United States, including the #1 rated hotel in San Francisco on Tripadvisor. In this interview, we discuss his early career, challenges he sees in hospitality today, advice for recruiting, and why hospitality is a beautiful profession.
Growing up in the hospitality business
I’ve always been around hospitality. I remember joining my dad on weekends when he had to go to the office as a kid. He was one of the first people with Hyatt, and raised his family inside the hospitality industry. Both my sister and I didn’t fall too far from the tree.
I’ve worked in a number of different independent properties in California and Colorado, and then got into the design, development, and construction of hotels and resorts. I now do project management for owners on behalf of the hotel management for five properties at Waterford Hotels & Inns. We do pure hotel management, as well as consulting. It’s a small, two generation family business.
Growing up, my dad had frequent trips to Hawaii that we joined. I’ve learned a lot from Hawaii and have a profound love of the notion of aloha and ohana, family. I found it something beautiful because unlike a city center hotel, or a Vegas resort where you got somebody with a plastered smile, the spirit of aloha hospitality is a real thing. It’s an undeniable pervasive force in their culture. It is infused with the notion of service and hospitality, and it completely informed my love of hospitality.
Where owners can screw up a hospitality business
Something happened to hospitality during a couple recessions in the ’80s and ’90s where some investors got into the market and began to aggressively reduce expenses to increase profits. They were asking things like ‘do you really have to pay that person that much,’ and ‘do you have to staff that many people there,’ and this whittled away a lot of what made hospitality special in those properties.
Hotels never really were high margin, high profit businesses. But it got to a point where the industry was led by capital minded people versus hospitality minded people. It really altered hospitality. They weren’t making decisions based on hospitality, they were looking at the P&L, and that was where everything was decided. You can’t create great hospitality from a spreadsheet.
One of the biggest things we’ve noticed about staffing is that it’s not just the unstaffed position. When you understaff for the purpose of saving on labor cost – or if you can’t fill the position because you burned your ability to draw proper candidates – the effect on the people at the property is deleterious.
I saw this a couple of weeks ago at a hotel in Napa. My wife had work up there and we stayed overnight and I saw a guy who was working his butt off as they were understaffed. You could see in his eyes – he’s this dedicated, loyal as hell employee, and he’s just in the weeds. You can see he was depressed about it. He’s not telling people like, “Oh, that sucks.” He’s working his ass off. But you can see the dehumanizing aspects of when a hotel isn’t even staffed properly.
You can’t blame the pandemic on the staffing crisis, because we’ve had this staffing crisis for at least five years. It’s been half a decade and we haven’t been able to reinvent what it means to have a career in hospitality.
We’re lucky at Waterford. Our company has been able to pay more than any of our competitors, and we’ve added crazy benefits because we have owners that are not only debt service minded and cashflow minded, but they’re also profit minded.
The business case for addressing staffing holistically
I’ve met owners that wonder why their property did twice as many spa services from 2015-2019 than it’s doing now. That’s not less marketing, it’s not bad reviews, it’s just that they can’t handle capacity.
When you add in the higher prices from COVID pent up demand, general value and sentiment is going to be lower. And in the long run, that’s going to really hurt the owners bottom line.
The hospitality industry is losing revenue by not having staff.
And so we’re seeing many companies updating their policies because they need people. One great example is all the grooming policy updates. We started auditing other luxury destinations and urban city centers, and grooming guidelines have changed so much at brands such as Fairmont, Four Seasons, and Montage. It used to be, “Okay, you can do another half inch of sideburn down by the ear.” It was that strict. And now it is basically just come be yourself and we’ll decide if anything’s too extreme.
The problem is, if we don’t staff because of an edgy hairstyle in the spa, that’s $150,000 of lost revenue in our spa. Or if a sleeve tattoo is disqualifying, that’s $200-$250k lost in room revenue of not being able to turn the room. There are very few hotels in America right now operating at full capacity that could be.
The staffing shortage means guests are going to have to change their expectations of what service means. It’s sad to see that in hospitality. It means, for example, doubling the time you’re waiting for a valet car because they don’t have the staff. Reduced capacity means less guests want to be there.
If a guest says, “Oh, the services aren’t there and some of the room amenities and stuff. I don’t want to upgrade.” Well, if they upgrade because they know they’re going to have a good experience, that money goes to the bottom line, there’s no added cost, there’s no operational complexity of that. And if people are starting to have this reserved sentiment, even during a time of the most historic pent up demand ever, we’re leaving so much money on the table. It’s just crazy.
The challenge today in staffing and recruiting today
The conversation used to be focused on how we can treat our employees well. Now it’s about what do we have to do to get an employee and retain them.
More hospitality leaders are talking about employee workplace culture. I remember hotel back offices that were basically a closet because everything goes front of the house. And we were laughing at technology companies for their ping pong and Nerf and fully stocked fridges. And now it looks like we should have been doing that. Now owners are understanding that getting and retaining talent is a revenue decision.
The issue was we had these blinders, this myopia that, “Hey, we pay on par with the rest of our industry or we pay on par against our comp set.” But we didn’t realize that a $65,000 salary in hospitality doesn’t have the same value as a $65,000 salary in technology where you’re sitting at home and working remotely versus putting on a uniform and a name tag and getting shouted at by angry guests.
When you look at Reddit and the F&B boards, you can see why this is happening. How many people have left that are driving happily for Amazon? They’re saying, “I listen to podcasts all day, and I run around and it’s healthy.” And so, we not only have to fine tune our culture so that people don’t leave, we have to understand what they need so that they’re actually happy at what they’re doing. It is a certain type of person that likes hospitality.
There’s a myriad of different reasons right now why we’re not finding the right candidates. In the past when there were hiring issues, it was easy. We could point to one problem to resolve. Right now it feels like there’s 15 data point: people can’t go back to work because one of the family members has to stay home because of a kid, or they’re taking care of a long-haul COVID person, or honestly the data of how many people we lost in the pandemic to other industries is quite frightening.
Although working in hospitality is a really noble career, and it’s still frustrating that in Europe, it’s considered a career and profession unlike what I often see here in the US. We’ve seen food and beverage, kitchen people and front of house, rooms operational people that are sort of like, “This isn’t a job, I’m on my way. This is a stopping point while I make my app or create my empire.”
Hospitality can’t be like that anymore. It’s got to be cultivated as a profession that is something really noble and awesome.
Advice on recruiting for hospitality
One of the big issues with recruiting in hospitality is that we have not set expectations about what it’s like to work in hospitality. Hospitality work is hard, and we haven’t communicated that. And that’s why it’s just become a job and people burn out and get out.
I heard Uber’s head of China interviewed for a podcast recently. She was just awesome, dynamic. She said growing up, her dad always kept telling her life is supposed to be hard. Three years ago, I would have thought that’s dark. Now I’m thinking, “I wish somebody had said that to me.”
We need to show how hard work can be good. The philosophical joy of what hard work can mean. That’s something that we have to rebuild.
When I think about recruiting, I think about people who would welcome the challenge. Military veterans would probably find hospitality to be a cakewalk. I also believe in people getting a second chance, and perhaps there’s more of an opportunity for people who were formerly incarcerated and have been through counseling to work in our industry.
Who thrives in a hospitality career
If I go to a movie or dinner with someone, sometimes I can’t even enjoy the movie or dinner, because I’m worried about the other person enjoying the movie or dinner. That’s an example of what you give of yourself in hospitality. We just want to give of ourselves to make your day better, whether that’s a plate of food or whether that’s an experience at a hotel.
That kind of notion of aloha runs through people that are empaths. And it does draw certain types of people to the industry which makes it a really cool community of dedicated and caring people that will expend their energy.
So there’s so many touch points from a staffing perspective, from an amenity perspective that makes hospitality really fun. The whole notion of surprise and delight is sort of born into people, people who like to host.
And actually in reaching out trying to sort of divine a new group of people that might really enjoy hospitality, I always think, the people that like to host in their home and have a really fun time planning maybe a wedding for a friend or something. Those people would fit right in and wouldn’t even feel like work.
Why hospitality is a beautiful profession
I love hospitality because it’s about the people and the experience and knowing at the end of the day you’re really impacting and changing people’s lives.
Whether you’re running a motel or a luxury resort, you can impact people’s lives and you can change them by teaching them little things, or showing them little things through amenities, or the stay, or the programming, or just the warmth of the hospitality.
Every day is new and different people, whether that’s a professional peer, executive committee, management team, employees, or whether that’s guests, new and different people, and new and different challenges. A career in hospitality is definitely not for everyone, but it definitely keeps you on your feet.
Everything about hospitality from day to day operations is about the experiential process of working towards a common goal. All these people from different walks of life, different backgrounds, different belief systems have to come together no matter what, and work together as a team to create something special to actually hopefully change people’s lives, both on the employee side and guest side.
I like the often overlooked side of hospitality. Housekeepers, for example. In an ideal situation, no one sees them, you’re not bothered by someone knocking on the door. They’re just in and out quietly, like fairies, straightening things up tidying up for you. It’s just the coolest thing.
As we all worked together through the pandemic, I was reminded of how special hospitality is. Even if they disagree with belief systems, or politics, or whatever, we’re all working together in a way that is very familial.
We need to help people understand the opportunities in our industry if for whatever reason they overlooked it in the past.