8 Ways to Reduce Employee Turnover in Hospitality

People are the backbone of any successful hotel, restaurant, or entertainment venue. So when a company’s star employees quit, the business feels the pain of not only losing key contributors, but also the cost of having to recruit and train replacements, with the hope of regaining that lost expertise.

The hospitality industry’s employee turnover rates are notoriously high, and while no business can prevent employee turnover entirely, hospitality companies can take steps to improve worker retention. This article explores some of the main causes of employee turnover and provides eight strategies for reducing it, with the goal of creating a happier, more stable workforce that meets customer needs and helps maintain profits.

What Is Employee Turnover?

Employee turnover refers to the total number of workers who were employed by and leave an organization over a given period of time, usually a year. A company calculates its employee turnover rate by dividing the number of employees who left by its average number of employees, then multiplying that number by 100. So in a given year, if 100 employees were to leave a company with an average of 1,000 employees, it would have a turnover rate of 10%.

In many cases, employees voluntarily choose to leave because they’re dissatisfied with their positions or because they find better job opportunities elsewhere. Turnover may also occur involuntarily if an employer terminates workers or lays them off due to organizational restructuring and cost cutting.

Businesses try to avoid a high turnover rate mostly because recruiting, hiring, and training new employees is time-consuming and costly. A high turnover rate is also associated with lower productivity levels, decreased morale, and the loss of institutional knowledge. Companies can reduce voluntary turnover by improving compensation, boosting benefits, providing opportunities for career advancement, and finding ways to make people’s jobs easier—for example, by adopting technology that streamlines tedious workflows.

Key Takeaways

• The employee turnover rate in the hospitality industry is significantly higher than the average turnover rate for all industries, which puts a financial strain on its businesses and causes stress for management teams that must constantly onboard new staff.
• A major retention challenge for hospitality businesses is the demanding nature of the work, often requiring people to stay on their feet for long periods and to work nights, weekends, and holidays.
• The most important factor in retaining frontline employees is wages, so businesses should make sure their compensation is competitive to prevent people from seeking higher-paying work elsewhere.
• To make employees’ jobs easier and improve operational efficiencies, hospitality businesses can use a range of technologies, including inventory management software to track stock levels, HR applications to assist with flexible scheduling, and point-of-sale (POS) systems to handle billing and payment.

Hospitality Employee Turnover Explained

The hospitality industry, including hotels, restaurants, and entertainment venues, has a higher employee turnover rate than any other industry in the US, according to the US Bureau of Labor Statistics. For the month of April 2024, for example, the average turnover rate for all industries was 3.4% while the rate for the leisure and hospitality sector was 5.7%. The average quit rate for the hospitality industry in April was 4%—double the 2% average rate for all industries.

Why do hotels, restaurants, and other hospitality companies have such a hard time hanging on their people? For starters, many hospitality companies require their employees to work long hours, including nights, weekends, and holidays. The work can be physically and mentally demanding bosses, customers can be difficult customers, and pay tends to be relatively low. This combination of factors can wear employees down and lead to burnout, making high turnover an ongoing challenge for hospitality companies. Additionally, a perceived lack of advancement opportunities or the ease with which employees can find similar jobs compounds the turnover challenge.

Importance of Employee Retention in the Hospitality Industry

In 2023, more than half of employees worldwide said they’re keeping an eye out for, or are actively seeking, new jobs, according to a 2024 Gallup report. It’s a sobering thought for business leaders, who know that retaining talented employees is critical to their companies’ success. The level of service that hospitality employees provide can make or break the customer experience and result in either a one-and-done sale or plenty of repeat business.

If skilled, veteran workers steeped in the nuances of hospitality are consistently leaving, and new, inexperienced workers are always scrambling to learn the ropes, the result can be a chaotic work environment where institutional knowledge is lost and customer service is lackluster, tarnishing a company’s reputation.

Besides, it’s costly to fill vacancies. Benchmarking data from the Society for Human Resource Management put the average cost of hiring each new employee at nearly $4,700 in 2022, with many employers anecdotally reporting spending much more to recruit and train new staff.

What Causes Turnover in the Hospitality Industry?

Why do so many workers leave hospitality jobs? One reason is because many employees work long, grueling hours, often on their feet, cleaning messy hotel rooms, cooking meals in hot kitchens, and catering to guests who can be demanding. Workers often have to work on weekends, nights, and holidays, creating challenges for those trying to maintain a healthy work-life balance.

What’s more, most entry-level hospitality jobs pay low wages and are part-time, often just a temporary means for someone to make money while in school or preparing for other ambitions. In fact, many hospitality workers view the jobs as short term, as they offer little opportunity for career advancement.

8 Strategies for Reducing Turnover in Hospitality

While eliminating employee turnover in the hospitality industry isn’t a realistic goal, business leaders and managers can implement the following eight strategies to improve workplace conditions and make it more likely their people will stay for longer periods of time:

1. Create a strong company culture: Hospitality work can be demanding, requiring employees to do a lot of running around, constantly fielding customer requests—and complaints—all while feeling the need to remain polite and smile, especially when their livelihoods depend on tips. Managers who pile on by micromanaging or sharply criticizing their workers’ every move end up pushing good people away. And in a tight-knit industry, word about an organization’s harsh management style can spread quickly.

   Although managers should expect their workers to meet customer needs to the best of their abilities, they should also acknowledge the pressures they face and aim to cultivate a supportive work environment. Managers can show that support in many ways—for example, by having employees’ backs when customers get out of line, by encouraging workers to take frequent breaks, by regularly expressing appreciation for jobs well done, and by providing opportunities for workers to socialize and bond after hours.

2. Offer competitive compensation and benefits: A 2022 report showed the most important factor in retaining frontline hospitality employees is competitive wages, which creates a retention problem for an industry where the pay is notoriously low. In 2024, the average nonsupervisory wage for workers in the hospitality industry was about $19 per hour, according to the US Bureau of Labor Statistics. Entry-level servers, housekeepers, and other staff tend to make even less, often starting at minimum wage. Many hospitality jobs, especially part-time positions, don’t come with health insurance, retirement plans, paid time off, or other benefits.

   Hospitality businesses should do a competitive wage analysis to pinpoint average pay in their geographic area and, when possible, offer job applicants more than the going rate. Companies should also reevaluate pay scales regularly, adjusting rates based on inflation and an employee’s work experience. Pay bumps are in order when an employee’s responsibilities increase. Consider offering more generous benefits, such as extra holiday pay or, for certain roles, college tuition assistance.

3. Provide perks and incentives: Offering other perks and incentives, such as free meals and hotel stays, travel vouchers, and discounts on cellphone plans and gym memberships, can also help boost employee retention rates.

   Other perks include bonuses for hotel teams that bring in exceptional sales or gift cards for bartenders who go above and beyond in providing outstanding customer service on a bustling night. Surprising employees even with small, low-cost gifts, along with generous words of praise, can go a long way toward building loyalty to an organization.

4. Prioritize employee safety: Clearly, an unsafe workplace is bound to drive employees away. Injuries in the hospitality industry can include cuts and burns in restaurants, exposure to harmful chemicals and electrical hazards, physical assaults, and even mental stress and fatigue. Hospitality companies can demonstrate their commitment to protecting their workers by:

   • implementing mandatory safety training programs to ensure that employees know the proper procedures for using cooking and cleaning equipment and other potentially harmful tools.
   • investing in safety and security products, such as protective clothing for workers, slip-resistant flooring, surveillance cameras and alarms, key-card entry systems, and security monitoring software.
   • conducting regular inspections to make sure all equipment is well maintained, as well as running periodic audits of workflow processes to ensure compliance with safety procedures.
   • establishing clear safety policies, encouraging employees to report any safety or security concerns, and giving shout-outs to employees who prioritize safety on the job.

5. Use technology to improve efficiency: One of the best ways to entice staff to stay is to make their jobs easier. Technologies that automate repetitive tasks (while improving operational efficiencies) can help. For instance, a hotel might implement a cloud-based property management system to assist with booking room reservations, speeding guest checkouts and billing, and streamlining other front-desk responsibilities. Or a restaurant could adopt a POS system that allows for tableside orders and payments to ease the check-paying process for servers.

   Meanwhile, inventory management software can help ensure that restaurants and other hospitality venues have enough stock levels on hand. Workforce management applications assist with staff scheduling, team communication, and employee goal-setting. AI–powered robots and automation tools can help with room service deliveries, cleaning, and managing HVAC systems.

6. Encourage work-life balance: Hospitality companies can encourage a healthy work-life balance in the following ways:

   • Avoid overscheduling workers and adopt flexible scheduling options, such as alternating weekends, compressed workweeks, and job sharing that allows people to split shifts.
   • Implement scheduling software so employees can input their availability and swap shifts to cover for one another when personal conflicts arise.
   • Consider offering paid time off, including vacation days, sick time, holiday pay, and parental leave.
   • Hire sufficient staff so the business can alternate employees to cover the least desirable shifts, such as late-night hours and weekends. Try to limit last-minute requests for employees to come in to work.
   • Promote work-from-home options for positions that don’t require an on-site presence, such as accounting, HR, and marketing roles.

7. Implement employee recognition programs: In the hustle and bustle of managing a company’s daily operations, it can be easy to take employees for granted. All attentive, hard-working employees want to hear that they’re doing a good job, and that praise can go a long way toward instilling loyalty to a business.

   More formally, examples of effective employee recognition programs include service anniversary and employee of the week/month/year awards that come with gift cards, personal time off, free meals, free hotel stays, or other perks. Additionally, companies can provide annual or quarterly performance bonuses to employees meeting measurable sales, productivity, guest-satisfaction-score, and other goals.

8. Provide opportunities for advancement: Workers initially might be willing to wash dishes at a restaurant or change sheets or carry bags at a hotel to get their foot in the door, but that doesn’t mean they want to spend their entire careers in those roles. To encourage top performers to remain long term, hospitality companies should provide a clear career development and growth path, augmented by structured leadership training, mentorship programs, and tuition assistance, especially for employees pursuing hospitality degrees.

Reduce Employee Turnover in Hospitality With NetSuite SuitePeople HRMS

Hospitality companies that find innovative ways to make employees’ jobs easier and more enjoyable are more likely to retain those workers over the long term. The NetSuite SuitePeople human resource management system (HRMS) streamlines HR service delivery for managers and front-line workers by connecting HR, payroll, and financial data in a single solution.

Moreover, SuitePeople helps companies to create a more engaging experience for employees—for example, allowing them to take charge of common HR tasks, such as viewing their time-off balances, tracking their hours and wages, and setting performance goals to qualify for pay raises or promotions. Additionally, the HRMS solution centralizes all employee information for more accurate real-time analysis and aligns employee performance objectives with business performance. Organizations can also use the tool to share performance reviews with workers and dole out rewards to top talent, which can increase productivity and boost retention.

High turnover in the hospitality industry is a real problem, forcing hotels, restaurants, and entertainment venues to spend an inordinate amount of time and money hiring new and often inexperienced staff to fill vacancies. However, business leaders can take action to reduce this revolving-door phenomenon, starting with offering generous compensation and benefits to quash the allure of higher-paying opportunities with competitors.

Employers can do much more to retain workers, such as creating a workplace culture that values employees’ contributions, remaining flexible about schedules to encourage a healthy work-life balance, handing out both monetary and nonmonetary rewards to top performers, creating robust career advancement programs, and embracing technology that empowers employees to easily manage a variety of day-to-day HR tasks. By investing in these strategies, hospitality companies can reduce the financial costs associated with high turnover and cultivate an industry-wide reputation as a first-rate employer.

Hospitality Employee Turnover FAQs

What is turnover in the hospitality industry?

Turnover in the hospitality industry refers to employees leaving hotels, restaurants, and entertainment venues. It’s generally expressed as the percentage of a company’s employees who leave in a given year. The employee turnover rate in the US hospitality industry is considerably higher than the average for all industries.

What is the best solution to reduce turnover?

When employees aren’t paid well, they are much more likely to leave an organization. With that in mind, the best solution for reducing turnover is for hospitality companies to periodically research average industry wage rates in their geographic area and offer their employees a competitive pay and benefits package.

What factor reduces turnover?

The main factor that reduces employee turnover, across industries, is paying competitive salaries, wages, and benefits.

How do you motivate employees in order to reduce turnover?

Motivating employees to stay at your company starts with fostering a positive work culture in which your people feel valued and recognized for their contributions. Ways to do that include formal recognition programs, career development plans, and training programs, as well as bonuses, gift cards, and other monetary rewards.

How do you handle a high turnover rate?

Businesses can take steps to reduce employee turnover by offering competitive pay, providing bonuses and other incentives, encouraging a healthy work-life balance, creating opportunities for career advancement, and implementing technology to streamline workflows.

How do you reduce the turnover rate in the hospitality industry?

The turnover rate in the hospitality industry is higher than that of most other industries. To improve retention, businesses should make sure the salaries and wages they pay are at or above the going industry rate in the area; cultivate a company culture where employees feel valued for their work; prioritize workplace safety; provide paid time off and other benefits employees value; and use HR technology to allow employees to easily track their hours, report their availability, and flexibly swap shifts with coworkers when necessary.