Strategies to Improve Hotel Staff Retention to Mitigate Cost Increases

The UK’s hospitality industry sits at a crossroads that will determine the viability of its future.

Along one path, a cycle of unsustainable employee turnover compounded by rising costs across the sector. On the other, a culture of high employee retention and engagement. What sits at the division in the road? Taking action on the issues that are driving staff turnover: a lack of appreciation, poor communication, and an absence of connection between staff and leaders. 

The consequences of high turnover extend beyond financial strain. We have spoken to dozens of general managers and HR leaders at hotels across the country, and they tell us the same thing: “High staff turnover negatively affects guest satisfaction.”

But it can be different. The right changes can effectively mitigate the incoming employer national insurance increases by lowering employee turnover and eliminating the high costs of recruitment in hotels. 

What do these changes look like? In this analysis, we’ll guide you through strategies that are proven to save money and reduce turnover by up to 60%. 

In the UK, the hospitality industry experiences an average employee tenure of three years, which is the second lowest retention rate in the country (‘Employee Retention Report’, Vestd). 

The price of this “revolving door” culture is £272 million annually (People 1st). Continuing down this path will cost hotels millions and sacrifice guest experience. Even worse is the impact on current staff; according to the hotel leaders we have consulted, jobs could be at stake if costs continue to mount.

If this opening sounds hyperbolic, this might not be the guide for you. But if it resonates with the problems you currently face at your hotel, we have a cost-effective solution to transform your retention, communication and culture.

The Hotel Staff Retention Crisis

The hospitality industry, including hotels, experiences an average employee turnover rate of 30%. In other words, three out of ten workers leave their jobs within a year (Deputy). Even if a hotel doesn’t have a problem with recruitment, the costs of chronic turnover are unsustainable. 

Replacing a hotel worker in the UK comes with a substantial impact on your HR budget. While specific figures for the hospitality sector vary, general estimates indicate that high costs are involved. Research shows that the average cost to replace an employee in the UK is approximately £11,000 (Glassdoor). 

Other studies suggest that replacing a salaried employee can cost between 6 to 9 months’ salary, equating to 50% to 75% of their annual earnings, though these numbers are mostly estimates. 

These costs include recruitment expenses, training, lost productivity and administrative processes. And since hospitality is a traditionally volatile sector for employee retention and staffing numbers, such expenses can accumulate quickly.

National Insurance for Employers Is Skyrocketing

Changes in Employer National Insurance rates have added millions in extra costs for hotels. Everyone in the hospitality sector agrees that it is imperative to reduce overheads elsewhere. 

Brought in during the Budget in 2024, the tax increase could add £3.4 billion to the sector’s costs this year (The Times). The tax rises are compounded by a rise in the National Living Wage, due to be introduced in the spring.

What do rising costs mean for retaining employees? Sadly, many hotels will struggle to raise salaries, driving hard workers from the industry. Without a comprehensive strategy to improve retention rates without salary increases, hotels face a difficult year.

The Connection Between Staff Engagement, Retention and Guest Satisfaction

For hotels, the road ahead looks grim. But it can be different. After years of research into the problem of high attrition rates across numerous industries – including hospitality – we have developed an all-in-one solution that begins with one clear goal: building a culture of engagement.

Engaged employees are far more likely to provide superior guest experiences, leading to higher satisfaction and loyalty. But this requires a culture of trust and care, clear growth pathways, and aligning work with your employees’ sense of purpose (McKinsey).

Many hotel leaders struggle to implement cultural changes, either because the framework doesn’t exist, they haven’t got the budget or because they don’t have time. 

Often, it is a combination of all three.

Part-time or casual employees are the backbone of many hospitality businesses, yet their transient nature can leave teams feeling disconnected. That’s why regular recognition can keep spirits high and reduce turnover rates.

How Mo Can Transform Hotel Retention

According to a study by Gallup, businesses that use recognition should expect around a 40% reduction in turnover rates, helping to mitigate other costs, such as Employer National Insurance rate hikes.

For years, hotel managers and HR leaders have relied on inefficient engagement methods that are no longer fit for purpose. With a lack of support and busy schedules, recognition activities like Employee of the Month and staff rewards were executed last minute and on an ad-hoc basis, leading to unnecessary costs. 

Mo has solved these engagement problems. In fact, we’ve gone a step further by bringing all of your employee engagement needs together in one platform:

✔️ Reward and recognition

✔️ Cross-department communication

✔️ Awards and nominations

✔️ Positive habit building 

✔️ Insights and metrics

Mo is designed to bring teams together, drive meaningful improvements in engagement scores, and reduce staff turnover. Through continuous, positive action, we help businesses build workplaces where employees feel valued and motivated to stay. Mo provides a central hub for recognition, celebration, communication and connection — perfect for teams that don’t share a physical office.

How Does Mo Work?

Our intuitive feed, inspired by social media (but without the negativity), makes it effortless to highlight achievements and foster a culture of appreciation. Think of it as a space dedicated to sharing the best moments of your company culture.

With Mo, you can increase the visibility of the moments that matter across your organisation, boosting connection across all teams. Strategic rewards and regular appreciation ensure that hospitality staff feel seen and valued. 

Instead of a neglected staffroom noticeboard, our platform brings recognition and communication into the spotlight, boosting morale and engagement. 

Using Mo’s manager Assistant, you can equip your team leaders to shape, demonstrate, and reward desired behaviours, ensuring a high-performing culture. And with an easy-to-use app and in-house support team, Mo makes recognition seamless, strengthening the connection between management and staff.

Employee engagement isn’t just a “nice-to-have”—it delivers measurable financial benefits. Regular recognition can make employees up to 63% less likely to seek a new job (Bonusly), while happier staff are 12% more productive (Fast Company). With rising Employer National Insurance and Living Wage costs, hotels must find ways to reduce turnover and optimise staff retention.

The solution is clear: investing in an effective engagement strategy pays off. Mo is your trusted partner in making it happen.

Success Story: The Grand Brighton Hotel

The Grand Brighton Hotel partnered with Mo in 2019 to develop a bespoke reward and recognition program aimed at enhancing employee engagement. They wanted custom, experience-based rewards that cultivated a sense of belonging across their diverse teams. Many of these rewards were sourced directly from the hotel, creating a personal connection between employees and the brand. 

Our initiative required both executive buy-in and validation from employees to ensure it met the entire workforce’s needs. Within a few years, the success was clear: an impressive 70% employee retention rate.

Success Story: Hotel Indigo Durham

Hotel Indigo is special in the hospitality industry. Why? They’ve set a benchmark for employee retention by improving engagement far beyond industry expectations. When we met Tom Orange, the General Manager of Hotel Indigo in Durham, they were set to transform their engagement strategy. 

Working with Mo primarily as a reward and communication tool, Tom and his team reduced labour turnover from 50% to an astounding 20%, far below the industry average. Keep reading to learn how Tom achieved these incredible results with the help of Mo.

Mo Improves Engagement and Reduces Attrition

Ready to take action on improving your culture and learn more about reducing employee turnover? Unlock your engagement potential and book a call with our experts today.