Staff Shortages, Technology & Post Pandemic Business - An Interview with Max Starkov
It's Brendon, your Technology Concierge today I'm joined by Max Starkov all the way from the US and we're talking about a number of things. All things technology basically. Good Morning Max, how are you? Hey, Good Morning from New York City. How are you Brendon? Good good I love that background. I really love that. Actually, I took the picture this is from
Central Park looking down to 57th street and this is the so-called billionaire row in Manhattan. Love it I love it. Max, I've followed you for a long time but for the people listening today would it be okay if you just gave us a quick rundown on your background? Background well 40 years in hospitality industry technology, Revenue Management and Digital Marketing. The last 25 years of naturally online and in the digital portion of hospitality technology and marketing. I mean I come from Bulgaria, Sofia Bulgarian. Master's degree,
undergraduate & Master's degree in hospitality studies and international tourism. MBA Fordham University in New York City. The last 25 years I have spent. I worked for the ministry of tourism of Bulgaria. Director of Bulgarian government tourist office for North America. Worked for American Express in Europe. I brought the first Sheraton, managed Sheraton to the country plus
you know was one of the co-founders of Hertz Bulgaria. So this is all before I came to New York City 32 years ago. And so the last I would say the internet age I was the Co-founder and CEO of three consecutive internet startups. Travelbreak.com which was the first online travel marketplace
where we had travel suppliers, hotels, car rental companies tour operators offering their services to over one million unique visitors that we had you know us our users and that was back in 96 so we had practically the full internet universe was on our website. Whale Media Technologies which was the first CRS and online booking engine in hospitality and then the last 20 years HeBS Digital which later became NextGuest which is now part of Cendyn which would say direct online channel consultancy technology CRM technology and digital marketing company. And that's what we did for the last 20 years until you know we merged with Cendyn. If you know Cendny just merged with Pegasus. So basically that's that was my whole how shall I put it my vision is to create an end-to-end hospitality digital distribution and guest engagement acquisition and retention platform and that's what Cendyn is today. So I'm I was very happy to see you know that my vision came into fruition only recently. But anyway. So that's what it is 40 years in 40 seconds. 40 years. One of the things you haven't touched on is
you've been teaching hospitality for many years. 20 years 20 years yeah. I mean as an Adjunct Professor or visiting Professor as it's called in Europe for example. I teach hospitality technology at NYU Tisch Centre of Hospitality, which is the hospitality school within the 40 000 students strong New York University. In the past I have taught CRM, I have taught in hospitality, I have taught Digital Marketing, Online Distribution and so forth different courses. And also I teach Advanced Digital Marketing strategies for Les Roches global hospitality in Switzerland. So two courses per semester more than enough to keep me busy and yeah and just to you know I enjoy sharing what I know with the next industry leaders.
And I share your passion for that not to the same extent but I love sharing. Hence I've been following you on LinkedIn for some time and wanted to do this interview with you. Max one of the biggest issues we're facing in the hospitality industry right now as we come out of the pandemic is the labour shortage. A couple of people I've spoken to have sort of indicated, it's fine, it's a short-term problem. Once the borders open and you know we can have
some immigration then we'll be able to fill the jobs. What are your thoughts on that? Is it a short-term problem? First of all, this is not a pandemic problem because in 2019 which was a record year in hospitality here in the United States for example there were one million open positions in hospitality in 2019. Yeah, that was pre-pandemic. Yeah! You know when we rely on foreigners to fill in those jobs, I mean in the United States there's a program where 66,000 temporary workers are allowed to come and work in hospitality. They come from all over the world. By the way many students you know just spend three months
during the summer and so forth Disneyland, Disney world the different resorts and so forth over 66,000 work permits that they issued to help with the labour shortages. Yet there were one million open positions. So what I mean is that we cannot issue 1 million temporary visas to fill in those jobs and that was 2019. So just imagine fast forward.
First of all, labour participation has dropped and it has dropped in Australia, Europe and the United States right now it's like 65% of the population or something like this actively working. Especially in the United States for example the unemployment rate is 4.6% so I mean anything below four per cent is considered full employment. Yeah and we're almost there you know 4.6 so in
this sense and right now in the United States, there are 10 million open positions across all industries yep 1.73 million in hospitality. Wow Okay. We're talking about today. So when people say that this is a temporary thing it will be resolved. My answer is it will never be resolved because it wasn't resolved prior to the pandemic and also labour shortages are not a hospitality native problem. You have labour shortages in construction,
manufacturing, in trucking. There are 200,000 truckers that are needed in the United States today. These are the people that you know with the huge rigs, the huge trucks that transport all of these containers and so forth. 200,000 and there are no takers and these people make sixty, seventy, eighty up to two hundred thousand dollars a year yet there are no takers. So what I mean is that this is not a hospitality problem. You know a lot of it and again this is the politicians talking, if we increase the minimum wage to 15 dollars then there will not be an issue. In manufacturing the starting
salary is 25 dollars an hour yet they have labour shortages. In construction today it's 45 dollars an hour so what I mean is that this is a problem of all of the labour-intensive industries and the labour-intensive industries are doomed to have this issue, not for a long time, forever that's my point. And I believe that the only issue is, the only solution I would say to labour shortages is changing the business model. For example from a full-service hotel becoming a select-service hotel or the limited-service hotel for example killing your F&B you know so you can do certain things in your operations. You know to streamline operations, simplify operations, to remove labour intensive for example food and beverage, room service forget it you just remove room service. Breakfast that is a la carte breakfast, no buffet breakfast so what
I mean is that there's certain business, I would say tweaks to your business model that you can do in order to simplify operations but the most important reduce the need for labour and reduce all of those labour-intensive operations. For example, what Hilton did with introducing housekeeping on demand, it immediately eliminates half of your housekeeping needs. Because if you go and stay someplace for two nights do you really need a housekeeper to “tuck” your bed and first of all who invented this “tucking” of beds in hotels? Nobody does this at home. No, you're right. Why do people do it? Tradition! It's such a, I mean, listen I was attending boarding school, I went to the military in my native Bulgaria and I'll tell you every morning we had this ritual where we had to do our beds you know perfect and so forth. Still, we didn't tuck our beds! This is like a self-inflicted wound. Because I'll tell you why. Because robots today
can do if you look at housekeeping. Housekeeping is approximately 175 tasks. Okay. So there's no robot that can replace a housekeeper one to one. But if you dissect the housekeeping job it consists of 175 tasks robots can do, different robots can do 150 of those tasks. Wow okay! They cannot tuck beds,
but if you remove the tucking for example then, employing a team of robots. Different robots, that do different things then you can resolve almost 100% of your housekeeping today. So that's my point. My point is that hoteliers have to become smart and they have to sit back and dissect their operations and see what are these points in my guest services, guest interactions, even guest services where I can first of all I can save efforts. Save resources, save human resources and of course and it's not only improving the bottom line but it's simply you don't have to hire those people that you cannot hire anyway you cannot find any way. That's my point because of the labour shortage. So in this sense on one hand if you dissect operations from the moment that the guest steps into your lobby and you know first of all mobile and contactless check-in. Immediately 50% of your front desk is
irrelevant. You don't need them and you will not fire them. You will simply redeploy, them give them other jobs. You will not have them because you cannot find them anyway so in this sense you will have you know 50% of front desk people that you have to hire less that's my point.
And then for all of those that haven't gone through the mobile check-in if you have you know self-checking kiosk in the lobby. You have some you know young guys, they could be interns that explain to the guests you know especially elderly guests how to do it and so forth. You know how they can self-check-in. And then all the mobile keys so basically you dissect the full,
I would say stay of a guest and you see where you can do improvements, you can introduce technology in order to solve your labour shortage problems. And I'll give you another example. It's not only when the guest comes to the property. You know outside of reservations, typically 50% of phone calls to the property five-zero per cent are “where the hell are you guys, what corner, what exit”. Explain it on the website. So you start by your website. You start by reviewing your website all the information. Is it correct? Does this information provide you know the right I would say the correct information, the correct I would say descriptions and so forth so that they don't call the property. Because if they call the property somebody has to pick up the phone. Who is that somebody? So this is the point. So you start from your website. You start from your
booking engine on your website you start with your descriptions and then the photos you know your visuals on the website on your social media through the distribution channels, OTA’s, GDS and so forth. And then from there, you channel those you know the during the planning and the dreaming. The planning and the booking phases of the customer journey. You dissect every single step every single interaction between your hotel and the potential guests or returning guests and then you see where you can introduce efficiencies. Some efficiencies are even better descriptions on the website. So that's not new technology, no it's not robots or AI. It's
just common sense. So you start from there and then introduce CRM for example. If you have CRM to communicate with all of the returning guests and all of the guests that have made a reservation and provide all the necessary information before they come to your property before they even send the mobile checking and so forth. So all of this and then you have you know you can automate this whole process from booking to people arriving at the property without a single human touching it without interaction with a single human which will save you. I mean again half of your front desk staff simply becomes irrelevant. You can deploy them to other better things to do. And then other property of course during the whole stay and what happens after the stay. I mean after people leave
again for example if you have CRM technology you can communicate with them. You can send them a guest satisfaction survey. You know marketing automation, drip campaigns you can keep engaging them throughout the period after they stay and hopefully bring them back to the property as repeat guests. So what they mean is that it's the first step definitely in solving labour shortages
is to assess all the interactions and touchpoints with your guests, pre, during and post-stay and if you do that any hotelier would find areas to provide efficiencies, to introduce better systems in place, to introduce technology that will help and so forth and believe me because this labour shortage is not going away period. Understand, Thank You Max. Max, we touched on robots and as you said I'm actually surprised that they can handle 150 of 175 tasks that housekeeping do. I've spoken to a few hoteliers about robots and in particular five-star hotels are currently of the opinion that robots are not for them and probably never will be. They were the same people that told me 10 years ago that mobile check-in and mobile key would never become part of their operation as well. What are your thoughts? I mean where do you see a place for robots is it limited service and in five-star properties, they will be there but they'll be behind the scenes, helping front-facing staff deliver better service. Yeah, I mean let's put it this way. First of all
if you follow the steps of this Japanese hotel Hennan if you remember 350 robots basically the fully robotic operation of the hotel. Yeah. I think that you'll be making a major mistake. Yes. That's not where we are today. First of all the robots themselves as Hennan discovered this are not good enough. Yes. But simple as that. So the way that I see it is a robot should be introduced very carefully after careful considerations and in places where they already excel. And I'll give you one example. You have the Tipsy robot, which is a bartender. It's a bartending robot which replaces four bartenders.
Wow, OK. And it's a major attraction in Las Vegas they have it in Europe and it's coming to New York City and so forth so in this sense in London they have it so what I mean is that this is a place where you can introduce a robot today. As far, as other places are if you operate a resort with you know big outside, you know gardens and like a big estate if you will, peace resort or golf resort then introducing let's say robot security guards. Yes. Robotic security guards
which are already in existence with in many of the Casinos in Las Vegas many of the airports in the United States you can see them. You know going back and forth. Knight Scope is the name of the company that specializes there. This definitely can be done today. I mean a security guard is 30 bucks an hour that's the salary. A robot is seven dollars an hour. No perks, no health insurance, no nothing. Seven dollars an hour 24/7. That's what the robots do. So what I mean is that so this is some of the things that you can introduce today. Yep. Now for
the for example of Food and Beverage already you have Piestro for example which is a complete robot pizza making, pizza making robot which produces a gourmet type of pizzas at I mean a very low price and very low cost. I would say and it replaces a full pizza restaurant. So if you're for example a hotel with some kind of a Food and Beverage replacing the whole restaurant if you will with this Piestro robotic pizza-making machine it makes sense. So these are the things that can be introduced immediately today. Housekeeping you can introduce for example Rosie the cleaning robot by Maidbot. I mean two thousand hotels already use Rosie. It cannot prepare a room like a human housekeeper. But it can help a human housekeeper with some of the very mundane and very unpleasant if you will jobs. So what I
mean is that so the way that I see it is more like not 100 robotic operation but Cobots. These are collaborative robots that work together with humans in the same team where the humans do certain things, yes and the robots do other things and hopefully the robots do the dirtier jobs you know the more dangerous jobs the more unpleasant jobs and the humans do more of a managerial job. And again the things that the robots still cannot do. So that's how I see it progressing. So Cobots are definitely a way you know like humans plus robots teams. It already has been most of Amazon Warehouses they operate in a cobot type of arrangement humans plus robots. I would say in many manufacturing places that's how it's been done. So that's not a new thing for the industry in general but in hospitality, this will be a new thing. So as far as the
luxury hotels, I fully understand because I mean the personal touch the personal attention to the guest is paramount. I mean I'm a big fan of Mandarin Oriental for example so in this sense I understand where they're coming from. The way that I see it at luxury hotels is that they will maintain a human facade for the time being.
Behind the curtains for example salad-making robots, line cooks that prepare the food so that the celebrity chef can focus on his magic. But the robots preparing, cutting the onions and the and the carrots and the stuff that's not a job for humans. Robots can do this easily so I mean in the United States there's a chain which is like more than a billion-dollar evaluation chain Sweetgreen which is like a salad, yes, salad place with a lot of locations around the United States. So they have acquired a company that makes complete 100 per cent robotic restaurants. Everything from A to Z is made by robots and of course focusing on salads in this particular case. So they claim we will not fire even a single person because I mean they have four or five people staff but we will allow our staff to be creative our staff to work with the clients and basically to improve customer service and so forth and let the machine do their thing which they do perfectly well. So you don't need people to cut you know potatoes and
cucumbers because a machine can do this perfectly. Much better than a human you know more precise and so forth. So what I mean is that so the direction that I see at this point is you take what's already proven in the marketplace that already works as a standalone unit and you start from there. You implement there and you keep your human operations in all other aspects and then over time you introduce robots where or AI applications for example. It's not only robots when we're talking
about robots I mean next-generation technology. Because robots are machines that can do certain physical stuff but AI can do much better things. For example and I'll give you an example if you go to a hotel today and you need an extra pillow what do you do? You call the front desk and say hey can you send me an extra pillow, please. And then there will be first of all somebody has to pick up the phone, take this order and say okay room 405 needs an extra pillow and then if they remember they will call housekeeping and say hey go to room 405 and bring an extra pillow. So that's the current process if you have an issue resolution or guest communication system in place which is like a messaging service. And there's so many players in this field. The guest using his own or her own smartphone will send a message to the hotel hey guys I need a extra pillow and then of course it's natural language processing technology which is AI, will decipher your message within milliseconds and say oh this is a housekeeping thing.
If your bathroom is clogged or you know the light is out then it will decipher this and it will send it to engineering and so forth but it's all automatic. And then of course housekeeping sends a robot for example to bring it to your room the extra pillow or somebody personally brings it. It doesn't matter. What matters is that at the end of the month the manager can see, the General Manager can see what's wrong with our hotel I have 150 rooms and 150 requests for extra pillows yes so I better buy 150 pillows just put them in every room. So you have the analytics, you have a business decision that's already made for you by the analytics. So that's where AI for example helps tremendously in exactly such issue resolution technology applications which are readily available in hospitality. They cost a dollar
per room per month, two dollars per room per month depending on how complex and this and that. And guess how many independent hotels have those? 10 per cent. Really Ok. That's crazy because as software as a service there is literally you know no implementation. No we have no information and with the efficiencies and guest service, the solution pays for itself. Of course. So my whole point is that so when talking about robots yes robots are needed I mean for example security, but security is not only a robot. Security if you have a mobile key system which automatically
logs which door has been opened, by whom, at what time and so forth and keeps security so this is it has nothing to do with robots it's a secure mobility system if you will. And many of those mobile key companies they provide this type of system. So what I mean is that business processes, AI definitely IoT which is the Internet of Things, devices in the room in a similar room like yours where they, you know the IoT devices they detect the temperature they detect whether there's somebody in the room itself. You know the lighting and so forth and then again if you leave the room 30 seco nds after that everything goes into like economy mode, into like a utility saving mode. The temperature goes to a certain level the lighting goes off and so forth and it's all automatic so there's no need for a human to go from room to room to check you know oh what happened. I mean did somebody leave the
air conditioning on which is you know like so we're wasting energy. My point is that it's a combination of next-generation technology applications that include physical, like robots. It includes devices, like physical like IoTs, includes AI, includes, automation and the combination of them all actually is what a hotelier should be looking at. Not just focusing on some, how shall I put it being obsessed with robots for example like "Henn an" in japan. The hotel. So it's the combination of many many factors and what for example, the Hilton & Marriott are working right now on the concept of the Smart Room. Yes. Where based on your loyalty member preferences, the room automatically adjusts itself to your preference.
Which they know, of course, they know through the PMS, through the loyalty member and your preferences and your past stays. And again these are preferences that are automatically adjusted based on oh Mr Smith when he's on a business trip he likes A, B, C, D & E but when he's on leisure he likes you know five other things. So the system automatically knows that whether you're coming on business or leisure or “bleisure” the combination of the two. Or a business trip with leisure
extension, for example. Yes. And then it adjusts itself automatically to your liking. You know if you need extra pillows it automatically sends a request to housekeeping to bring an extra pillow. If you like a single malt scotch whisky the bottle is coming and right there you know with a bucket of ice. If you like this if you like that. Your Netflix login information is automatically logged into the TV set. And the temperature of course you like cooler, you like hotter, you like warmer, you like subdued lighting, you like extra bright lighting. All of this is changed automatically
and that's what actually hotels already have rooms like these Marriots and Hiltons. And you know Chris Nassetta the CEO of Hilton says that "there will come a time and it will come very shortly when you will know your room and the room will know you". So in this sense and that's the future of hospitality. And what's behind it is IoT devices definitely. Definitely robots you know delivery concierge type of robots to deliver all these
things. Yes. Artificial intelligence, of course, I mean to remember all of this and second to make conclusions based on your behaviour, your past behaviour your preferences. And again to be able to come up with perks and benefits and like different types of services that the system knows that you might like or you will like for sure 97 per cent chance that you will like x and so forth based on your past behaviour. So it will be a combination of next guest technologies. Not just of a single application. Yep Yep. So we need to look at it from a holistic point of view.
Yes and then holistic point of view not only the technology but also holistic point of view as far as the customer journey because the hotel whether the hotel realizes this or not the hotel interacts with the customer in the dreaming phase, in the planning phase. In the dreaming phase. When somebody says oh I just saw this article, this blog, this posting on social media about this amazing hotel in the Bahamas or in Tobago or in whatever. Yeah. And so that's why that's the dreaming phase and then okay let me see do we have the time, when can we go this is the planning phase. Where exactly what how are we going to get there flights and then, of course, the hotel is the hotel that we want to stay in, is it very expensive, is it cheap. You saw the planning phase and then of course
the booking phase then the stay phase and then the post-stay the sharing the retention phases so the hotel interacts one way or another in all of those phases so that's where you have to analyze and see what kind of technology, what type of technology applications, what kind of efficiencies sometimes you know I mentioned it's not even technology. It's like finding a better description on your own website. Or coming up with a with a like local activities guides tours activities experiences attractions guide and positioning the hotel as the center of the local universe. Sometimes that's all it takes. But again so that's why it's not just pure technology it's not some futuristic you know like a science fiction type of technology implementation that will solve our problems it's a very comprehensive very holistic. I would say approach and ultimately if you look at it shouldn't be that expensive. Because many of the things are simply brainpower, expertise. And you can hire this we can rent this expertise from outside. I mean I don't even
for a second think that a hotel a hotelier has to develop has to know IoT devices. How they work, how they talk, how they interact with the PMS or let's say AI, oh my god where do I start. Natural language processing, machine learning, AI what is the difference how do I start with all of those. No, you don't have to do that. There are vendors outside that specialize. Smart vendors
all you need to do is to have a young person, like technologists as we call it here in the United States. Somebody who is not an IT but somebody who understands the business applications of technology. And somebody who will be your leader in this whole transformation. Max the other question I wanted to or thing I wanted to talk about is business of the future. So you know the US is ahead of us but we're now coming out of the pandemic our borders are opening up or starting to open up people are going to stay in hotels do you think that city hotels, large city hotels which have been probably 70 per cent corporate in the past, will the corporates return in the same numbers as they did pre-pandemic. Well,
I mean I don't think that we're going back to normal as many people are hoping we are going forward to the next normal. And this next normal will be quite different than the old normal that we know in the pre-pandemic times. So so in this sense, I don't believe that the corporate business will come in exactly the same fashion in this mode. At the same time, I don't think that the corporate business will disappear. It simply will come in a different form and shape. In the sense of you have even today in the United States mid-size and smaller enterprise the corporate the sales force from this mid-size and smaller companies that are hungrier that has less resources than the big guys they travel on business even now. So
they do travel on business. What you don't have is the big fortune 500 companies because of liability issues and so forth internal regulations and the likes but mostly liability issues. Some of them were even warned by their travel insurance providers that "hey no business travel"! Then we have to you know revoke your insurance or you know increase your premiums that was during the epidemic last year. So in this sense, that's why I mentioned
liability considerations by the major corporations. But mid-size and smaller companies don't have similar considerations. So in this sense, they are travelling fortune 500 companies not travelling. The big corporate meetings are not happening yet. You know with 500 people with you know kickoff meeting with 1000 people or corporate whatever it is the United States meeting, annual meeting you know with 500 people. Those are not happening that's for sure. So what I believe in the future is that
business travel will continue, unmanaged business travel you will have maybe 60-70 per cent the rebound if you will of manage corporate travel. Hybrid type of hybrid type of corporate events of corporate meetings. So instead of 200 people attending you'll have 100 attending and the rest will be you know Zoom or Microsoft teams or whatever. Yeah. Virtual. So we're talking about
technology here. Yes. Does the hotel have the right technology for this type of hybrid meetings? Yep. So that's why I mean if you look at all the projections especially for the United States Q4 of 2023 it's like a corporate business will be back to some kind of acceptable level. Ok. But in the meantime, there is a new opportunity for hotels.
And this new opportunity is all of those remote workers, how do you train them, how do you energize them, how do you focus them on the corporate mission. That's where it's a new type of business. People coming from their weekend houses from Airbnbs and congregating in one place where they finally meet each other after so many months. Or they meet their boss for the first time face to face and then they sit in the room they have all the entertainment. There will be more entertainment than actual work done in those meetings simply because it's more like team building, team bonding exercises.
Are our hotels prepared for this type of business? It's a new type of business. Interesting. And I think that this will be huge. And if you have the right product you will get a lot of this type of business. Because, mind you, the office environment, I mean the con & prons, I mean, but I don't want to go there. But in my experience, we/you achieve at least 50 per cent of your knowledge as a specialist in as an expert in anything through tacit knowledge. Which you gain from your co-workers. For example,
your co-worker working with a client that has this issue which again over coffee you exchange information and now you're prepared. This thing cannot happen over Zoom. Yeah. So my point is that we're missing the training, I mean, I remember in my company we had a six-month probation period. When we had people outside out of college six months probationary period and they learned learned learned during six months they took certifications that they had to take and so forth. You can take these certifications at home but you will miss exactly this you know like tacit knowledge that you can acquire from your surroundings from case studies of other of your colleagues from things discussed over a beer during happy hour or over coffee with a colleague and so forth with a friend. Many of because we had a lot of young people out of college and so forth at my company, many of them got became you know like more than just colleagues they got engaged they got married you know like office marriage. Yep. Right now you don't have this. So what I mean is that
so that's why managers are understanding that if they don't introduce some kind of face to face even in a 100 per cent let's say remote work environment, if a company has accepted okay we will we'll shut down the office. No more office you know we will work remotely. Like some companies have done it already. Yes. I think that these gatherings which will be more as I mentioned team building, bonding get to know you get to know your colleagues type of meetings and of course, there will be the corporate side with all the here are our goals for this year, here our objectives, here's what we stand for in the industry all of the typical corporate you know stuff. That's a given. Yeah. But are hoteliers prepared for something like this? What about a scavenger hunt as a team-building exercise. How many hotels can do it? Such things what I mean is that what about the Disco night like a throwback to the 1970s. Are they even prepared to do something like this? So I mean that here the creativity can be I mean just imagine. But what I mean is that it takes somebody to sit, analyze, talk to potential
clients see what they want and come up with a product. And this is I think that this will be a very viable product in the coming at least three years. I think that's fantastic I love the idea Max I love it. Max, I really appreciate your time and the knowledge and thank you so much it's been a pleasure. Brendon, you're more than welcome and don't be a stranger you know where to find me.