Predicting Job Retention of Hourly Employees in the Lodging Industry

By Milman, Ady; Ricci, Peter | Journal of Hospitality and Tourism Management, April 2004 | Go to article overview

Predicting Job Retention of Hourly Employees in the Lodging Industry


Milman, Ady, Ricci, Peter, Journal of Hospitality and Tourism Management


The primary objectives of this study were to explore the reasons behind hourly employee turnover and to explore variables that would assist in predicting employee retention in the lodging industry. Data was collected from 230 hourly employees in 10 small and medium-size hotels located in the Southeastern United States (US). The results empirically confirmed that hourly employees' retention was predicted by self-fulfillment and working conditions rather than monetary rewards. More specifically, hourly employees were likely to stay with their current employer during the next 12 months, were not interested in finding another job, had a positive experience with their lodging facilities' policies, were satisfied with their current job, attributed a higher level of importance for paid vacation, and had a positive experience with regard to their employer's humane approach to employees.

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In the late 1990s, the travel and tourism industry directly generated over 7.5 million jobs in the United States (US). An additional 9.4 million jobs were supported by indirect and induced sales, resulting in a total of 16.9 million jobs (Travel Industry Association of America, 2000). To meet consumer demand, employment in major travel and tourism sectors was forecasted to grow in excess of 21% between 1996 and 2006 (Travel Industry Association of America, 2000).

While the prospects for employment in the hospitality industry are relatively high, the industry is faced, like many other sectors of the economy, with the challenge of recruiting, motivating, and retaining employees. The labour market pool is getting smaller, and the turnover rate is high. In the lodging industry, for example, turnover rate is estimated at between 60 and 300% annually (Foley, 1996). Turnover costs are soaring and usually include "separation costs", "replacement costs", and "training costs." Some estimate these costs to be between $3000 and $10,000 per hourly employee (Woods & Macauly, 1989). To assess the cost of employee turnover, Hinkin and Tracey (2000) developed a computer program that featured a number of variables that calculate the overall direct (e.g., advertising, signing bonuses, and formal training) and indirect costs (e.g., reduced productivity of new hires and disruption to the work effort of existing employees) of turnover. This computer program will assist human resources professionals when budgeting for total turnover-related expenditures.

Employing in the lodging industry is not an easy task as human resource managers are challenged with unique recruiting, selection, training and development processes, especially of hourly employees. Employee retention, job enrichment, motivation, customer satisfaction and other on-the-job issues like safety and discipline are additional concerns for employers in many lodging facilities.

Following the September 11, 2001, tragedy, the United States has seen the first decline in employment expansion in over a decade. The terrorist attacks, coupled with an economic downturn, have caused the services industry to eliminate 111,000 jobs, mainly in travel-related businesses such as hotels (46,000) and auto services (13,000), in particular, auto rental agencies and parking services (US Department of Labor, 2001). Furthermore, in the wake of September 11 events, many hourly employees who have been laid off from their lodging properties may have chosen not to return to the hospitality industry. Several months after the tragedy, many lodging operations were rebounding and faced considerable challenges in recruiting employees.

While many lodging facilities have provided detailed training for hiring, motivating, and retaining employees, most of the instructional design was generated from non-hospitality segments of the economy and was focused on salaried employees. Research focusing on hourly employees is somewhat scarce as most studies concentrate on fun-time employees.

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