For Jeff Durham and Joe Wolosz, owners of the 46-room The Redwood Riverwalk, a boutique motel in Fortuna, California, the Great Resignation seems to have skipped them by, even as the county still grapples with acute labor shortages.
As the hospitality industry struggles with a crippling labor crisis, the mighty little Redwood Riverwalk reported virtually no turnover throughout the pandemic. Perhaps there are lessons for some of the industry’s giants and even larger independents who struggle to retain staff.
Durham and Wolosz offer attractive incentives such as holiday bonus, interest-free loans and gift cards on employee birthdays. As they say, it really isn’t rocket science, and the owners told HOTELS their actions should set an example for the industry.
“We have given out over US$15,000 in loans and written off about US$1,000 in bad debt. We just approved a loan of US$1,500 for a car purchase. How can we say no to a dedicated team member for guaranteed transportation to work?” Durham said. “We had a housekeeper tell us that her dad asked her why she didn’t find a better job. She replied — ‘because they care about me.’ The past 30 months have been difficult for the business but not concerning our team. We were not short-staffed; we did not experience the great resignation. The policies, procedures, and culture that we had in place worked.”
With the hotel’s occupancy hovering at 20% during the pandemic, business was slow but even then, the team got together to decide who would stay and who would be laid off. Many, who had to leave, came back and the hotel also hired more employees. Durham, who is a proponent of universal basic income, says his team has found the right mix of wages and benefits that work perfectly for his team and location.
In conversation with HOTELS, Durham spoke about what Redwood Riverwalk is doing right in terms of employee satisfaction, what other hotel companies are getting wrong and the significance for employees having a career path.
HOTELS: How did you achieve zero turnover? It seems impossible even when you are the best employer in the world. How do you account for this?
Jeff Durham: Before March 2020, we averaged about 14 team members, and since then, we have been running about 20 team members. In the previous 30 months, we fired one employee. Believe me, it was after much re-training, interaction and feedback. It was not a surprise to this individual when the time came to let them go.
Two employees gave us 30 days’ notice in January 2020, one to move out of state and one to return full-time to school. Thirty days’ notice from hotel employees is what we get from our team. Three employees left us in the past 30 months, and all three have returned to work with us. One of the employees that asked to come back ‘because we were a better environment to work,’ owed us money from our non-payday loan benefit and paid us back in full upon return. One of our most senior housekeepers of over 17 years announced that she is leaving to spend time with her family and be available to her grandkids. This is all an interpretation of turnover and usually not the positive kind we see in the hospitality industry. We celebrate when our team members return to school, leave to be with family, or have higher aspirations.
H: Which incentive has paid off the most, and why?
JD: There is no one magic pill. It must be the entire culture. I could pay US$20 an hour, but if the team doesn’t like coming to work, they won’t come back. I could offer free parties every weekend, but if I don’t pay a living wage, they will go somewhere else. The hotel’s steward, Alicia Thompson, and I have found the right mix of wages and benefits that work best for our team and our location. As Alicia said, ‘We give a damn.’ It is simply based on relationships, connection, interest in them, access, communication and resources.
H: What else is benefitting turnover other than the benefits described?
JD: We focus on flexibility. So, when there is a change in your school schedule or life, we can work with you to make it happen. We also provide holiday pay – everyone gets a gift card on the five major holidays. If you work, it is a higher amount than if you had the day off, and everyone gets paid. I believe we are one of the very few if not the only one doing this in the area. We got rid of the vending machines and sell our snacks and beverages. The team gets those items at our cost. Our funky retail items (books, games, jewelry) are all at cost for the team.
All the team gets a monthly snack credit and non-payday loans. We also charge the community US$250 for a four-hour pool party. All team members get two free pool parties a year, with no black-out dates. Plus, the many surprise lunches and holiday meals.
H: How do you provide access to interest-free loans and how much is your team taking advantage of this opportunity?
JD: It is a straightforward system. If you have worked for The Redwood for six months or more, you can get an interest-free loan of up to US$500. You have to complete a form that states the amount desired, what the loan is for and how much you would like taken out of your paycheck every two weeks to repay the loan. That’s it.
We will not dictate to the team member how much needs to be taken from their paycheck; we don’t want them in the same position as when we started the loan. The Hotel steward and I review the request, and we have probably said yes to these 99% of the time.
We had a team member going through a divorce that needed US$32 for her mobile phone bill, or her phone would be turned off. We had another member that has been with us since day one and she needed over US$2,000 for the dentist. We agreed to it. She paid us back US$20 a paycheck, and the loan was just repaid in 2021. We have given out over US$15,000 in loans and written off about US$1,000 in bad debt. We just approved a loan for US$1,500 to go towards a car purchase. How can we say no to a dedicated team member for guaranteed transportation to work?
H: Has the hotel closed at all during the pandemic and, if so, how did you help staff manage through?
JD: We never had to close. Occupancy was in the low 20%, so we were slow. The team got together and decided who wanted to stay and who wanted to be laid off. Some had children at home, so they knew they had to be at home with them. Others had second jobs they were still working and were happy to come in when needed. Alicia was in constant communication with our team members. We were checking in and updating. They have all since returned. Plus, we had to hire more.
H: Why are you such a proponent of universal basic income and how do you think it would impact your business and the greater hotel industry?
JD: First, we are doing microloans at the hotel with no interest. So, the money has to be paid back. As for UBI, I’ve read the stories and research. I followed Stockton & Finland. I’m currently reading Give People Money by Annie Lowrey. I have been in the hospitality business since I was 15 years old. I was fortunate to have the opportunity to go to college. My parents paid for school, and I worked five days a week to pay for everything else. Not everyone has that opportunity or support. Not everyone can ‘pull oneself up by one’s bootstraps,’ which implies that if you aren’t doing that, you are not working hard. And why does it have to be without help from others? Nothing wrong with working hard and asking for help.
I have seen firsthand what financial assistance can do for health, state of mind, stress, happiness. People are putting the money on food, clothing and utility bills. Maybe people don’t need two jobs. Perhaps they can spend more time with their families. Maybe they can afford to see the doctor for preventive care. There is no doubt this will all positively impact my business and my community.
H: What are hotel companies (big chains and independents) getting right in the employment battle, and why?
JD: The most significant discussion I see them getting right is the opportunity for the employees to have a career path. My motel and company are not big enough to do that. So, the larger companies have the resources and capacity to change that perception and make hospitality a career. I know people in management positions that went to college, and people in management positions that have worked their way up. The industry needs to ‘show their work’ of how we can all make that happen from within the organizations. I love that Taco Bell is starting a business school for employees to become franchise owners.
H: What are hotel companies getting wrong, and what advice do you have other than extolling the benefits of what you do?
JD: Employees are being treated as a line-item expense. Wages are one of our most significant expenses, so we treat the employees as such. They are expendable.
H: What are your recruiting efforts like, and how do you stand out when looking to hire? What unique characteristics might you look for when recruiting?
JD: It has become word of mouth. Referrals. Hire for attitude, not aptitude. Cross training.
H: What wage do you pay among line level staff?
JD: We start everyone above minimum wage, which is currently US$14. We have team members that have been with us for more than 15 years so the rates fluctuate. I have been tracking what a living wage is for Humboldt County and using that as a basis. We are still developing this program.
H: Have you set up your HR department differently and what else are you doing that is “untypical” of a hospitality employer?
JD: We utilize a PEO (professional employer organization), which has been an excellent service for us. The support on the HR side is tremendous and has significantly affected supporting us with our team. Plus, Alicia is diligent with documentation and follow up and follow through as a means of discipline and training.
H: What percentage of sales is labor costs?
JD: Out the door, including worker’s compensation and payrolls services, 30%, and I am not complaining because in 2021, I had an 86% occupancy, and much of that cost was housekeeping.
H: What more can your peers learn from you?
JD: We knew what we had to do about eight years ago. Alicia and I started implementing programs by reading reports and articles on hiring and employee retention. We knew it was better to let someone go after three weeks if they did not fit in with our culture. We would be short-staffed for the time being and we would focus on getting the right person into that position.
There are always those employees that can either be pulled to the top by positive team members or dragged down by negative team members. We made sure to focus on those negative team members and work on developing them. If it didn’t work, then they were the ones to let go. It is amazing how it affected the team for the best. The result of all this hard work? We were right. The past 30 months have been difficult for the business but not concerning our team. We were not short-staffed; we did not experience the great resignation. The policies, procedures and culture that we had in place worked.
It’s not rocket science. It’s everything we read about concerning management. It’s everything we read about what employees want and desire with employment. Be engaged and active. Lead the way. Give back. It is indeed hard work, and we are fortunate to be able to do it.