In the hospitality industry, where service experience is directly determined by people, a high turnover rate is not just a human resources issue; it's a massive "hidden cost" silently eroding profits, operational quality, and competitive edge. Following the post-COVID-19 recovery, Vietnam's hospitality sector entered a new growth cycle with a significant increase in hotel and resort supply, leading to intensified pressure in recruitment and talent retention. According to a market report by Savills Vietnam, between 2020 and mid-2024 alone, Vietnam added approximately 45,000 mid-range to high-end rooms, representing a nearly 25% increase in accommodation supply. (Savills)

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The rapid expansion of the market has made human resources one of the biggest pressures for hotels and resorts. Many businesses are facing a continuous recruitment cycle, staff turnover during peak seasons, a shortage of skilled labour, and escalating training costs. In this context, accurately assessing the "lost value" from high turnover rates and developing a sustainable human resources restructuring strategy becomes a critical priority.

High Turnover Rate – The "Invisible Loss" That Costs a Fortune

Many hotels currently view turnover solely from a recruitment perspective. However, in reality, the cost of high employee turnover is far greater than the cost of advertising job openings or onboarding new staff. An employee leaving triggers a chain of losses, including: recruitment costs, retraining costs, adaptation time, reduced operational efficiency, diminished customer experience, pressure on the remaining team, and the risk of further departures. According to international analyses cited by Deloitte and SHRM, the total cost of replacing an employee can be equivalent to 6–9 months of that position's salary, especially high for management or skilled professional roles. (Reddit).

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In the hospitality sector, this impact is even more severe because hotel service relies heavily on the stability of the operational team. An inexperienced receptionist, a supervisor lacking the skills to handle complaints, or a constantly fluctuating housekeeping department can directly affect reviews, OTA rankings, and repeat customer rates. According to Savills Vietnam, the Vietnamese hotel industry is facing a dual challenge: a sharp increase in accommodation supply coupled with a shortage of internationally qualified personnel, particularly in management and highly specialised operational roles. (VietNamNet News) This leads to the common situation where staff constantly move between hotels in search of better compensation, making turnover the "new normal" for many hospitality businesses.

Why is the turnover rate in the hotel industry always high?

The hospitality industry is inherently characterised by high work intensity, significant pressure, and unstable work schedules. However, the underlying reason for the increasingly severe turnover rate lies in human resource management models that have not kept pace with market development. Many hotels still operate with a "recruit to fill vacancies" mindset, rather than building a long-term HR strategy. When the market recovers strongly and businesses expand rapidly without proper resource planning, the existing team becomes overloaded. Front-line staff work long hours, lack clear development paths, and see no opportunities for advancement.

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Meanwhile, the new generation of workers in the service industry tends to prioritise work experience, corporate culture, and work-life balance on par with income. This is a major shift in the post-pandemic labour market that many hospitality businesses have yet to adapt to. Furthermore, recruitment competition among international brands, luxury hotels, and new resort models makes the HR market extremely volatile. According to Savills Hotels APAC, many businesses are struggling to retain skilled teams, especially in rapidly growing tourist destinations. (Savills)

The "hidden costs" businesses often fail to measure

The most dangerous aspect of a High Turnover Rate is that most losses do not appear directly on financial reports. When an experienced employee leaves, the business loses accumulated operational knowledge, informal processes, problem-solving abilities, and internal relationships. This is a form of "institutional knowledge loss" – organisational knowledge loss – which Deloitte considers a significant factor in declining business performance when turnover is prolonged. (Reddit)

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For hotels and resorts, the impact is also evident in the customer experience. A constantly changing team leads to inconsistent service quality, slower response times, and a significant reduction in the ability to personalise experiences. This directly affects ratings on Booking, Agoda, Google Review, or TripAdvisor – factors that are increasingly critical for revenue. Additionally, high turnover also brings psychological consequences within the organisation. When employees continuously leave, the remaining team can easily become demotivated, lose trust in the organisation, and experience increased work pressure. This is the "domino effect" that causes businesses to constantly recruit yet still face staff shortages.

HR Restructuring – A Vital Solution Instead of "Recruitment Firefighting"

As the hospitality industry enters a phase of competing on quality rather than quantity, employee retention is no longer solely an HR task but must become a core operational strategy.

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Instead of continuously addressing turnover through constant recruitment, hotels need to comprehensively restructure their HR model towards greater sustainability. This includes reviewing organisational structure, optimising staffing levels, building career development paths, redesigning corporate culture, and enhancing employee experience. An effective HR system not only helps reduce turnover but also directly improves RevPAR, operational productivity, and customer satisfaction. This is a trend many international hotel groups are pursuing as the market shifts towards competition based on service quality and personalised experiences.

NewSun Hospitality's HR Restructuring Solution Package

With experience consulting and partnering with numerous hotels, resorts, and tourism businesses in Vietnam, NewSun Hospitality has developed a specialised HR Restructuring solution package for the hospitality industry to help businesses address the root causes of turnover and optimise operational efficiency. The solution focuses on comprehensively analysing the current HR structure, evaluating operational performance, and identifying "bottlenecks" that are causing resource drain. From there, NewSun develops a restructuring strategy tailored to each hotel, resort, or accommodation chain model.

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Beyond consulting, NewSun partners with businesses to rebuild human resource management systems, standardise operational processes, develop KPIs, train middle management teams, and design long-term talent retention strategies. The solution's unique strength lies in combining practical hospitality operational thinking with a modern strategic HR perspective. This helps businesses not only reduce turnover but also enhance competitiveness, optimise costs, and build a stable team for long-term growth.

Conclusion

In the hotel industry, turnover is not merely "employees leaving"; it is an indicator reflecting a business's operational health and management capabilities. If left unchecked, a high turnover rate becomes a massive hidden cost that erodes profits, service quality, and brand value over time. Conversely, businesses that invest wisely in HR strategy gain the most sustainable competitive advantage: a stable, professional team capable of creating exceptional guest experiences. If your business is facing staff shortages, persistent turnover, or operational instability, it's time for a systematic restructuring strategy rather than continued "firefighting." Contact NewSun Hospitality today for in-depth HR restructuring solutions tailored specifically for the hotel and resort industry.

References:

  • Savills Vietnam. (2024). Vietnam Quarterly Market Report QMR H1/2024. Savills Vietnam. (Savills Vietnam)
  • Savills Vietnam. (2024). Viet Nam Tourism and Hospitality Update: Market Recovery and Challenges in 2024. Savills Hotels APAC. (Savills)
  • Savills Vietnam. (2022). The Path To Embracing Long-Term Development For Hospitality And Real Estate. Savills Hotels. (Savills)
  • Vietnam News. (2018). International hotel operators flock to Việt Nam’s bustling tourism scene. Vietnam News. (vietnamnews.vn)
  • CiHMS. (2025). Hospitality Labor Shortage: How Technology Is Filling the Gaps. (cihms.com)