How much does labour turnover cost? A case study of Australian four‐ and five‐star hotels

Abstract

Purpose

Employee turnover is a significant challenge for human resource management (HRM) strategies and organisational performance. This study seeks to present findings drawn from an extensive survey of labour turnover in the Australian accommodation sector. A particular focus is placed on turnover rates and costs.

Design/methodology/approach

Based on labour turnover literature and an industry panel, an online survey was designed and distributed to four‐ and five‐star hotels across Australia. Human resource managers from 64 hotels participated in the survey, providing a representative sample and a response rate of 29 percent.

Findings

The research shows that the major costs are attributed to labour turnover. These are costs that both the industry and individual operators should examine closely, as they impact substantially on hotel operating costs and profitability. It also indicates that the levels of service, consumer experience and value may be impacted.

Research limitations/implications

A limitation of the study is its main focus on tangible labour turnover costs. Additionally, findings based on four‐ and five‐star hotels may not apply to other accommodation sectors.

Originality/value

The literature on hotel labour and turnover costs is limited and the paper provides the first major study in the Australian context, adding new knowledge to one's understanding of labour turnover and cost impact on hotels. It also suggests areas where hotels may better address the turnover issue.

Citation

Davidson, M.C.G., Timo, N. and Wang, Y. (2010), "How much does labour turnover cost? A case study of Australian four‐ and five‐star hotels", International Journal of Contemporary Hospitality Management, Vol. 22 No. 4, pp. 451-466. https://doi.org/10.1108/09596111011042686