5 Reasons Why The Hospitality Industry Sees a 74% Annual Turnover Rate

The turnover rate across all U.S. industries is only about 12-15%.

A Cornell study found that losing an employee costs a business $5,864 per employee. This cost includes expenses related to recruitment, onboarding, training, and the disruption in workflow, which all add up quickly. Unfortunately, these costs have an even larger impact in the hospitality industry. Turnover rates are nearly double for hospitality organizations, with an average loss of $9,932.

This can get very pricey very quickly for hotel managers. A 2023 report from the U.S. Bureau of Labor Statistics notes that the hospitality sector has a 74 percent turnover rate annually; the average turnover rate for other U.S. industries is between 12-15%. To narrow that down, about 6 percent of hospitality staff leave every month – even doubling seasonal quitting rates in retail.

Not only does this cost you money, it costs you quality. Hotels that prioritize employee retention and implement effective strategies to encourage employee satisfaction are much more likely to succeed in delivering above-and-beyond customer service to their guests. It’s hard to meet guest expectations when your business is a revolving door. So what causes employee turnover?

Lack of flexibility

Many hospitality roles involve irregular hours, including evenings, weekends, and holidays, which can disrupt employees’ work-life balance. When employees are unable to accommodate personal commitments or find it challenging to balance their work and personal lives, they may become dissatisfied and seek positions with more flexibility. Managers who don’t allow for schedule adjustments, time off, or job-sharing are only going to make that issue worse.

Poor communication

Effective communication is crucial for smooth operations and guest satisfaction. When communication between management and staff is lacking, employees may feel undervalued, unheard, or uninformed about important matters. This can lead to frustration, uncertainty, and a sense of disconnection. When employees don’t have a clear understanding of their roles and expectations they’re more likely to feel dissatisfied.

Little to no recognition

Hospitality jobs often entail dealing with difficult customers and long and irregular hours. Putting on a smile with the patience of a saint for a full day isn’t easy, especially on top of any physical tasks. This is even more so the case when an employee has other stressors in their life– which they almost certainly do. A lack of recognition from their managers can leave them feeling like their hard work isn’t appreciated, encouraging them to look elsewhere.

Poor management

Ineffective or unsupportive management practices can create a toxic work environment. This can very quickly lead to job dissatisfaction and encourage employees to look for a position elsewhere. Managers who lack communication skills, fail to provide clear expectations, or do not offer constructive feedback can leave employees feeling frustrated. Inconsistent enforcement of policies and favoritism can also lead to resentment and conflict among staff.