Unlocking the Big Wins in Hotel Profitability Today - Steven Moore, Actabl

Josiah: With costs rising faster than inflation and demand flat or declining, profitability is under pressure in hospitality today. And that has big implications for how you think about every part of your business, from people to performance. In this episode, Actabl CEO Steven Moore shares highlights from his presentation last week at the Lodging Conference, revealing where owners and operators are finding real wins today. Let's get into it.

[intro]

Steven: So in the morning we had speed stats and I think there were probably eight different people that presented. And all of them were pretty similar, revenue not performing the way we wanted. That was kind of like some general choppiness, uncertainty. We are not in a great market environment right now for hotels. And then Lindsey towards the end, she was like, hey, yeah, we're looking at budgets and that is indeed true. We had this growth forecasted for the year and we were missing it by this, but we're seeing a lot of operators maintain their profit margins, which at the end of the day, a great business is a business that has growing cash flow, right? So obviously that starts with revenue, but it certainly doesn't end with revenue. There's things you can do on the expenses to make sure you're growing and generating that cash flow. And so Lindsey teed it up so well. And I think she was very encouraging to the operators that are just like, hey, even in this environment, we're still winning. You can still find wins. And so I took that and had a little bit more time than the two to three minutes that she had, which she did very well in. But I talked for 10 minutes just about how we're seeing those management groups win and how we're seeing those management groups maintain their profit margin. And so there were really two things that I talked about. One was being laser focused on labor. So if you take a step back and we all know this, but you take a step back and you look at your expense profile, 50% of it is going towards labor. So you think about where are we going to find the ROI? Where are we going to find the savings? And how are we going to spend our time? You can be an expert in one thing in labor, and that's going to impact 50% of your expenses. The other 50% might be 20 different things. So you can spend a ton of time being an expert or negotiating your exterminator contract, right? Or the other 20 things that would move the needle. And it's just not a great use of time. It's not that you can completely ignore it. You have to do a lot of different things very well to be profitable in hospitality. But take the simplicity when you can get it. If you know there's a needle-moving material item that makes up 50% of your expense, get that right first before you try to go too fancy or get too cute with these other 20 things on the second half of the expense profile. So anyways, there are a couple of case studies there. One, we saw a management group actually unplug their labor management system because they thought that would save money in a revenue pressure environment. I get it. I've been in those meetings where people propose something like that. It's like, oh, this makes us feel good today. We went and looked back at their data six months after they unplugged the system and for every dollar they saved on the system, their labor costs increased by $5. So there's a pretty clear picture of how serious this issue can be and how it can go very, very wrong if you're not looking at it closely. And then on the flip side, there's a bright horizon story too. We were working with a management group that plugged this in, and they're on track to see close to $40,000 per hotel per year. You scale that out over their entire portfolio, and that's creeping up on a million dollars in savings this year just from managing their labor well. And so, hypothetically, you look at the 40,000 branded hotels, every hotel is different, but you apply those savings to all of those 40,000 branded hotels in the U.S., that's over a billion and a half dollars of potential savings in the industry that can come from managing your labor really well. So this is a big, big opportunity in the hospitality industry. And so that was the first thing I think we're seeing as we get to look at all of these budgets and all this data that we have of operators that are really winning. The second thing is just...

Josiah: Could we just unpack the labor for a moment? Because one of the fun things about working at Actabl is I get to see behind the scenes with many of these customers that we work with, and it's been fascinating to see. There's not only the direct savings, there's the implication on the asset value, if you kind of play that out. But there's also the cultural element. And you've been an advocate of this with the hospitality companies that we work with around thinking about, yes, there's a cost play here. This is a financial outcome we're driving for. But you think about the impact on people. And it's not just about cutting costs. It's about right-sizing labor in a way that scheduling works better for people. Probably morale improves. I've seen there's benefits holistically for that approach.

Steven: No, I mean, and you think about it, the hospitality industry has one of the highest turnover rates of any industry. So you think about, yeah, just from a scheduling perspective, if you're overscheduling people, not only are you overspending on your labor, but you're having people show up and it's like, what am I doing? It's not a very engaging environment. I'm sure maybe it's nice for a few days. You just get to sit there and you don't do a lot and you just kind of do odd things and you get a paycheck, but you don't really feel like you're making a difference. It's not a terribly engaging culture. And then on the flip side, if you've underscheduled and you have somebody that wants to work, is looking for that paycheck, and you didn't schedule appropriately. And so then you have to use some contracting firm or pay overtime to somebody else to get the job done. You're sitting there like, hey, I would have taken that spot. And so how can we make it really easy to schedule the right people at the right time? And then if you need to do something like, hey, I'm sick or a kid's sick, or I need to be somewhere, I need to swap a shift. You can make that really easy with your colleagues at the hotel. So just from an engagement perspective, people want a paycheck. We know that they also want to make a difference. And so if they're there not making a difference, that's not a successful long-term strategy. And then if they're not there and they want to make that difference, that's also, I think, really destructive to culture. So you're absolutely right. This is not just about how can we look at a formula to save money. It's also about creating a culture where you can put the people in the right place at the right time to make a difference. And there's a flywheel effect to that when you have a highly engaged culture. And that ultimately, as we know, translates to how your associates are going to treat your guests. So there really is this kind of self-fulfilling, productive feedback loop and how labor impacts the guest experience, which then even impacts revenue too.

Josiah: Yeah, well, I mean, this is actually a great segue into the other part of your presentation, because this element of culture, even at this conference, has been really remarkable for me to listen to leaders talk about this, because it sounds a little bit touchy-feely, a little fuzzy. It's like, that'd be nice, but this is a hard economic environment. Why invest in culture? But you've gotten into some of the benefits of this, but there's a specific part of culture that you got into where you see people and organizations winning. And I wonder if you could speak a little bit to that, because there's many ways to think about culture, but there's a specific part of culture that you were sharing.

Steven: Yeah, so I think Ben Campbell from Hospitality America said it really well. He effectively said, you need transparency into what you're trying to do. You need accountability in order to push people towards the goals. And then you need technology to equip them to drive results. Again, going back to making a difference, it's like, how does what I do tie to our ultimate goal? How am I performing against that ultimate goal? And then do I have the tools that I need to achieve that result? And so all of those things put together, the transparency, the accountability, the technology, that drives really strong results. And it's one of those things where, as big of an advocate as I am for managing your labor and using technology and looking at the formulas and looking at the data, the hospitality industry and just looking at a specific hotel, it is so dynamic. There are just too many things going on and there's too much variability at any one time to just guarantee that, oh, we just hit the formula button and that's going to lead to the outcome that we want. So you need something that can transcend that and that's culture, right? You create a culture where people are going to take these inputs that they haven't seen before, they haven't been trained on before, or there's no formula for. They're going to make the right decision because the right culture exists. What are your values? How do you act? What are you trying to do? It's a truly powerful tool. It takes a lot of time. It takes a lot of effort. It can feel kind of touchy feely or soft, but it's absolutely not. And back to the retention piece on the savings, I mean, if you have a terrible culture, you're going to have a hard time retaining people in an environment that's already hard to retain people. If you have a great culture, you'll be able to better retain people. And it's like, hey, if we have to hire two people a year for one job versus six people a year for one job, that's going to translate to savings on the bottom line.

Josiah: Yeah, there's savings and there's a strategic benefit to this. You touched on this where in an environment that's very volatile and changing quickly, it's impossible to just have one plan that's going to spell out every situation, right? So it gives you an agility. But there's also, we were having a conversation yesterday and you were getting into this where sometimes leaders might think, hey, if I could just parachute into specific functional areas, the company would be fantastic. But even if you could do that and clone yourself, it's impossible to scale like that. And so there's a growth opportunity here for leaders to think this way.

Steven: Yeah, no, I think that's right. Every leader at some point will think, man, if I was just in that situation, that would have gone better, which is obviously false. But the way to address that is not to try and be in every situation at all times, but it's trying to create a culture. And create a culture where you can influence the way that decisions are made, the way that people act, but also create a culture where you can bring out the best in all of the people that you're working with on your team, right? I think it's, what would you say, egomaniacal to think like, oh, I want to instill my culture as a leader across everyone. It's going to be this way. It's like, how do we create a culture where we're able to elevate the best of everybody with their different talents, with their different viewpoints, to create a more robust culture than you ever could from one person's head?

Josiah: It's so interesting to kind of hear you talk about this and think about the opportunity that exists. Everybody, we're in this moment of recording the fall of 2025. The economy is where it is. Who knows exactly how this all plays out? But I think leaders need to think about not only driving performance today. You touched on this earlier. Think about the big wins with labor. But something like culture takes a while. This isn't something that you can roll out and snap your fingers in two weeks and the culture's transformed. It's an investment that can start with some practical steps today. You've outlined many of them, but it's investments over time. And I've kind of seen you do this leading Actabl where you've kind of thought like this from day one, even before I was at Actabl, you were talking, you were advocating for this is how we're going to collectively exist and work. And it factors into how you recruit. It's a long game. It's a long game as well as things that our listeners can do today to get that ball rolling, it seems.

Steven: Yeah, well, that's nice of you to say. I think that's right. We're certainly trying. I think if you're using an illustration, you think of a bucket and you're trying to fill it up with water and let's call that your culture bucket or whatever. There really is not a hose. You just like turn on the hose and you put it in and it's filled up in 30 seconds or whatever. You have this little dropper. And that is your tool to improve your culture. And so you just got to continuously invest in it over long periods of time. At least, that's the way I think you lead to lasting, enduring results on the culture side. And yeah, it takes a lot of work. It takes a lot of perseverance, but you just keep going. And I think that's one of the remarkable things about being in the hospitality industry. Sometimes we'll talk about be the thermostat, not the thermometer. So set the temperature, don't reflect the temperature. And I don't know if there's a better industry in the world than the hospitality industry at setting the temperature regardless of the environment that you're in. So there's a lot of perseverance. There's a lot of keep going. There's a lot of like, hey, influence the surroundings and the people that you're with versus just being acted upon. So yeah, takes some investment, takes some time for sure.

Josiah: There's a performance opportunity. It's also just, I mean, there's so many benefits to this. I was just thinking a few days ago, we had somebody apply to the company and end up joining the company. And it was because of them hearing you talk about culture. So it's a magnet for talent. I just hired someone recently that this was influential in her journey to eventually joining my team at Actabl. And it's so interesting. It's like there's performance benefits, but you get this halo effect that it's magnetic for the right sort of people.

Steven: Yeah. So, well, that's great to hear. I think there are certainly performance benefits and it's just like life's short. And so you want to make sure that you're using the gifts you've been given well. You're making a difference and creating something in the world that you're wired to do to create and that you're finding some fulfillment in that. And so there's absolutely, I guess it just keeps building and getting better. And so there's absolutely performance benefits to that on the financial side, I think on the experience side, but also just on the humanity side. It's like, hey, this goes by pretty fast. And so let's do something that we feel like matters and makes a difference.