The Labor Line That Is Over and the Occupancy That Is Under
You supervise the rooms division of a 120-room hotel. It is the 20th of the month. Budgeted rooms revenue for the month is $310,000; you are tracking to $268,000. Budgeted rooms-division labor is 22% of rooms revenue, or $68,200. Month-to-date labor cost is $51,400 with 10 days left. Your GM says labor must come in at or under budget in dollars, not percent, because the ownership report compares dollars. You have two vacancies you have deliberately not filled (one houseperson, one laundry attendant), a full-time room attendant on paid leave through month-end, and a night auditor who has been working one extra shift a week for three weeks to cover a resignation. Overtime is currently $2,900 month-to-date.
1. Do the arithmetic and state where you actually stand, and whether the dollar target is achievable.
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Run the numbers before you make a promise.
- Remaining budget: $68,200 − $51,400 = $16,800 for 10 days.
- Current run rate: $51,400 over 20 days ≈ $2,570/day, which would spend about $25,700 over the remaining 10 days - roughly $8,900 over budget if nothing changes.
- To hit $16,800 you need about $1,680/day, a cut of roughly 35% in daily labor cost for the rest of the month.
Is that achievable? Only partly, and you should say so plainly rather than agree and miss. A 35% cut in 10 days means cutting shifts, not trimming waste. Some of it is genuinely available: the unfilled vacancies are already savings; the night auditor's extra shift is overtime you can end if you can cover it another way; scheduling to occupancy (you are running below budget on revenue, so staffing should follow) can take out real hours.
What is not available: the attendant on paid leave is a fixed cost you cannot schedule away, and cutting too deep in housekeeping at a 120-room property shows up as dirty rooms within days.
The honest answer to the GM: 'I can get to about $X; I cannot get to $16,800 without a service risk I am not willing to take unilaterally. Here is the gap and here is the choice.' Bring the number, not the excuse.
2. The GM insists on the dollar target. What is your plan, and how do you protect service and the team?
Read the worked answer
Take the target seriously, then make the trade-offs explicit and documented.
Actions, in order of least harm:
- End the night auditor's extra shift by covering with you or a cross-trained front desk agent - this removes overtime, which is the most expensive hour you buy.
- Do not fill the two vacancies through month-end, and say so in writing so the savings are credited to your line.
- Schedule to the actual forecast, not the budget. At $268,000 revenue you are running roughly 13% below budget; staffing should reflect forecast occupancy, not the budgeted number.
- Trim non-productive hours - deep-clean projects, back-of-house tasks - before cutting guest-facing hours.
- Ask the GM for one of two explicit trade-offs: either accept a documented variance, or accept a stated service reduction (e.g., stayover service every other day) in writing, with the guest-impact noted.
Protect the team: do not solve a dollar problem by quietly adding work to hourly staff without pay, and do not cut the attendant on leave or the new hires first. Communicate what is changing and why, in a short stand-up, so the rumor does not become worse than the cut.
Protect yourself: put the plan and the residual gap in an email to the GM. If the target is missed, the record shows you flagged it and proposed alternatives - that is the difference between a miss and a failure.