6 Major Problems in the Hotel Industry and Simple Solutions
Being a hotelier comes with its fair share of rewards and challenges. Managing guest satisfaction and creating a memorable experience for everyone who checks in, is no easy feat. And when problems inevitably arise, they can quickly add to an already demanding workload. Tom Diaz, a Professional Services Consultant with 16 years of expertise at FPG, has a deep understanding of the industry. In this article, he explains some of the biggest problems in the hotel industry and shares FPG’s expert solutions for overcoming them.
The Biggest Problems in the Hotel Industry
1. High Staff Turnover
2. Low Guest Satisfaction
3. Low Employee Engagement
4. Time Consuming In-House Upsell Programs
5. Free Upgrades During High Occupancy
6. Inadequate Product Knowledge
High Staff Turnover
Problem: This is one of the biggest problems in the hotel industry. “Staff shortages? It’s an epidemic,” Diaz says. “In America, it’s a revolving door at the front desk. Some hotels can’t keep anyone." But on the flip side, Diaz explains that other hotels have agents sticking around forever. "And a lot of the time, it’s because they are following FPG’s program.”
Solution: “First thing’s first—update those job descriptions.” He explains that job descriptions haven’t caught up with the times. “Upselling isn’t a ‘nice-to-have’ anymore, it’s essential. But the ads? They still read like we’re hiring for a body, not a service-driven salesperson.” He continues, “Are you putting language in there that attracts sales minded individuals? And I'm not talking about ‘The Wolf of Wall Street’ type. I'm talking about someone who thinks sales is actually a good thing. Sales is just offering the best to everybody. Write ads that attract people who see sales as offering the best to everyone.”
Diaz adds it’s also communicating what he calls ‘the full basket of benefits.’ So start with clear job descriptions, set expectations, include solid incentives and interviews that focus on the right qualities—no more ‘we just need a body’ interviews. “And when it comes to the incentive,” he adds, “I know countries might have laws around what to say but if your ad doesn’t mention commission or benefits, you’re missing out on top talent. Last month, our top performer earned $2,000 in commission. That’s what people need to hear.”
Low Guest Satisfaction
Problem: Diaz believes it all starts with understanding guest expectations. “Guest disappointment begins with agents not being aware of what the guests actually expect,” he explains. He points to Unreasonable Hospitality: The Remarkable Power of Giving People More Than They Expect, a book that highlights a very important point: "In many organizations, the people with all the authority have the least amount of knowledge of what's happening at the front line. The front line has all the knowledge and none of the authority." Diaz elaborates, “If the GM is calling the shots from an office miles away, you’re going to see low guest satisfaction. How you treat your employees is how they’ll treat your guests. Neglect them, and they’ll neglect your guests. If they don't feel an emotional connection, they're not going to make one with the guests.”
Solution: To fix this, Diaz stresses the importance of surveys—both for guests and employees. “Guest surveys are great, but employee surveys? They’re incredible,” he says. “Some hotels do a great job asking staff what’s working well and what needs fixing.” For Diaz, asking the right questions is key. “You have to ask both your guests and your front-line staff what matters.” He adds, “When you send out guest surveys, make sure you're also surveying your employees. Their insights are just as valuable.”
Next, Diaz emphasizes rewarding staff who shine in positive guest feedback. “You can’t reward them if you’re not collecting feedback,” he says. He recalls a fun, competitive way to drive guest satisfaction at a hotel in Las Vegas, where departments like the front desk and housekeeping went head-to-head in a contest to see who could gather the most positive guest comments. “Service is service,” Diaz says, “and you can provide five-star service, no matter what role you’re in.”
Low Employee Engagement
Problem: Low employee engagement is another one of the biggest problems in the hotel industry. Diaz is a firm believer in using proven dialogues. “We know FPG’s program works,” he says with confidence. “It’s been proven all over the world. The dialogues we teach aren’t just theories—they’re a collection of proven strategies.” He stresses that success isn’t just about the numbers. “Success is tied to the action,” he explains. “The right action creates the number.” Diaz goes on to explain, “It’s consistency. Saying the right thing every time. And eventually, one out of ten, someone’s going to say yes.”
He elaborates further on a common mistake: focusing on the wrong number. “A lot of people focus on the revenue number, but they’re not thinking about how many times they made the offer,” he points out. “It’s about the process, not just the outcome.”
Solution: A powerful mindset shift: “When you leave an FPG session and hit the front desk, it may not work the first time, the second time, or the third. But every transaction is practice. If you don’t get the ‘yes,’ think about what worked and what didn’t. Now that said we do have people who go straight to the front desk and they hit two upsells in a row. But for some people, it takes practice, and so every transaction, every check in is practice for the next one.”
Diaz concludes, “Part of it is respecting the guest enough to tell them about the best you have. If you approach it with a serving attitude, not a selling attitude, it changes everything. I can get ten ‘no’s’ in a row and it doesn’t faze me. All I’m doing is offering you the best—if you say no, you’re saying no to the best. You’ll still get what you booked.”
Time Consuming In-House Upsell Programs
Problem: GMs thinking they can design an in-house upsell program themselves, with manual tools that are hard to measure and track. Diaz points out that many GMs may spend 30-40% of their time running upsell programs manually. “And let’s be honest,” he continues, “If you’re delegating it to a manager who’s already busy and say to the manager, this is your program to run. Go get the numbers. Well, they might spend the first few weeks trying to train the team, but eventually they slip back into administrative work on their plate and see this as a yet another program being thrown at them.” The result? “That person just gets bogged down, and then they start having contempt for the program. And that's the worst thing that can happen.”
Solution: Diaz’s solution is simple: “Consult FPG because when you get an FPG person working with you, you're getting years and years and years of experience. When FPG comes in, we say, let us take care of that. Let us take it off your plate. And we're going to literally guarantee, you're going to have a stronger bottom line at the end of the year.”
“FPG has saved people thousands, if not tens of thousands, of hours that were once spent pulling reports and working on spreadsheets. Instead of spending an hour in the back office, with FPG, a manager can now press a button and instantly get the numbers they need. "What can I do with my hour now? Let me go coach my team.” This shift creates a cycle of positive results, with better numbers and more time spent where it matters — with the team.
Another top tip: Involve the front-line staff early. “Ask the people doing the job what they think. Get their input on the upsell program before you roll it out. Even if you don’t use their ideas, they’ll feel valued and invested. You’ve got to set the stage first, not just throw a program at them.”
Free Upgrades During High Occupancy
Problem: When it comes to supply and demand, hotels operate the complete opposite way to the rest of the world. As Diaz says, “High occupancy means high check ins, that means high opportunity at the front desk. So if you have a lot of opportunities to sell, but now you're giving everything away for free, you're never going to hit your revenue goal.”
If you're at 99% occupancy and the night manager assigns every guest to a room, some guests with small room reservations end up getting a free upgrade. That’s the issue: giving everything away for free when revenue is needed the most.” He highlights the law of supply and demand: “The less we have of something, the more valuable it is.”
Solution: Diaz reveals the ‘hidden upsell strategy’ that many miss when managing room types. "If you have a standard King on the first floor and another on the 10th, the one on the 10th is definitely more valuable," he says. "It probably has a better view—not just a parking lot, but maybe a sea view or a lake." He continues, "Here’s another hidden opportunity: the King suite on a corner. Corner rooms often have more window space, and depending on which side of the hotel it’s on, you can sell it as something special." Diaz offers examples: "On the east side, you get a gorgeous sunrise every morning; on the west side, you’re treated to beautiful sunsets every evening." He stresses that the location of the room matters. Some locations are more valuable than others.
“The message should be, it’s not about the sale, it’s about the offer. If a guest says ‘no’ to an upgrade, don’t feel bad. You’re just offering the fair price for the room.”
The dialogue:
Guest: “No, I'm okay. I don't want the upgrade, I don't want to pay for anything else.”
Front desk agent: “Oh, I understand, by the way, when was the last time you came to Dallas, Texas?”
Guest: “Oh, it's been about five years.”
Front desk agent: “Have you ever stayed with us here before?”
Guest: ”No, never.”
Front desk agent: “I know we talked about a price difference for that room with a gorgeous view of the city. Since it's your first time visiting us. Let me see what we can do about the price. We might even be able to waive it for you this time.”
Diaz says, “Well, guess what? They were already pre-assigned to it, but only the agent knew that, and now the guest gets the free upgrade and says, “Oh, wow. This front desk agent, he’s a heck of a guy!”
Diaz makes another very valid point: “Only use this technique if the guest does not know ahead of time that they were assigned a free upgrade. We should never feel guilty about charging a guest for the better room they were assigned for free due to high occupancy. In a situation like this, we’re finally getting the fair price for the room. When we don’t do this, we’re basically training our guests to ask if we have free upgrades every time they check in.
Inadequate Product Knowledge
Problem: Front desk staff who last did a room tour three years ago have outdated product knowledge. "When did you do your room tour?" Diaz asks. "When I got hired," they reply. "And when was that?" I ask again. "Three years ago." Yet, since then, the hotel has undergone a full floor renovation, and no one has been shown the updated space. "Incredible, isn't it?" It really is.
Solution: "Do a room tour plus. Have agents visit the rooms, make a list of features and benefits, and bring it downstairs to offer that room to every guest. The result? More product knowledge, more upsells and more confidence in their offerings." He adds, "The more you offer that room, the more you'll master it. And before you know it, you're building a culture of product knowledge experts." He points out how valuable this knowledge can be, saying, "Some of the best front desk agents come from housekeeping—they know the rooms inside and out, and can tell you by room number what’s inside." Diaz highlights the importance of product knowledge. "If you put a housekeeper with the right attitude at the front desk, they’ll outsell most agents in no time."
In conclusion, while managing a hotel comes with its fair share of daily challenges, understanding common problems and knowing how to address them can make a significant difference. We hope this list of problems and solutions provides valuable tips to help you work through some of the complexities of hotel management. If you found this article helpful, be sure to explore more on our blog How to Increase Hotel Revenue: 6 Tips for Hotel Staff.
If you would like to find out more about FPG, you can request a free revenue assessment here.
