Visit any hotel, resort or airport, and you’ll know Americans are traveling once again.
AAA Travel summer bookings were up at least 11 per cent from two years ago, and the American Hotel & Lodging Association reported hotel occupancy for 2021 was expected to average 55.9 per cent. This is slightly higher than earlier projections of 52.5 per cent and up from 44 per cent in 2020. The association expects occupancy rates to rebound to 61.7 per cent next year.
Despite these healthy and encouraging statistics, the hospitality sector is still suffering. Moreover, the rebound reported is not proceeding smoothly: rising costs, unpredictable supplies, irregular demand, customer dissatisfaction and staff shortages as they pivot away from the sector.
According to the Wall Street Journal, “hiring woes could cost the region up to 10 per cent of its annual $6.9 billion tourist economy”. While a recent poll by Joblist of 13,000 job seekers, more than half of US hospitality workers said, they are not considering returning to the industry. They cited their reasons as:
- Wanting higher pay;
- Less physically demanding workplace; and
- Better benefits
Indeed, in September this year, Marriott, the world’s largest hotel company, announced that it was engaged in a “fight for talent” and struggled to fill a 10,000-person staff shortage at its 600 US hotels.
Marriott CEO Tony Capuano told the Financial Times that redundancies during the start of the COVID-19 pandemic had left workers “rattled” about the future of the travel/tourism industry, leading to sharp drops in staffing levels.
“We’ve got to do a consistent job of sharing the narrative that it is, in fact, an industry segment where incredible careers can be built,” Capuano said. “The ability to tell that story around the globe is more important in the face of this fight for talent than it has ever been.”
Moreover, while revenues, room rates and occupancy have enjoyed a good summer, many hotels, resorts and restaurants have cut hours and services. With as much as 20 per cent of hospitality staff worldwide now looking for jobs that are not so vulnerable to lockdown volatility, it is not surprising that Marriott, among others, are “actively and aggressively hiring”.
And they’ll need to work hard at encouraging workers back.
Joblist reported searches for restaurant jobs in April were 35 per cent lower than the same period in 2019. This is because many of those laid off during the pandemic have found alternative employment and are unwilling to return. As a result, hospitality businesses are now contacting previous unsuccessful applicants to fill now vacant positions.
The main reasons behind staff shortages are low labor wages and high employee turnover. HospitalityNet reports that entry-level salaries are relatively low compared with other industries, while the sector has an annual turnover rate of 73.8 per cent (Bureau of Labor Statistics). This means that six per cent of staff will leave their job every month.
In other words, the quit rate for the sector is higher than the US average standard, while weekly earnings are lower than the average standard.
This shortage of labor is more than just frustration with being unable to fill positions. Staff shortages lead to increased labor costs as minimum pay rates have to rise to encourage staff to return.
Like many leading hospitality brands, Marriott is now focusing on markets where demand has recovered and offering new incentives and benefits.
But what else can the hospitality sector do to resolve this staffing crisis?
One answer, of course, is to raise wages. HotelManagement.net reports that some wages for hotel new hires have increased by more than 20 per cent in recent months.
Housekeeping, front desk and maintenance team pay rates are now at the highest levels in history. And some positions are now earning $20 per hour, over double what was paid just 12 months ago.
But is this too simple a solution? Del Ross, CRO at Hotel Effectiveness, believes so. Once COVID-19 relief payments cease, there are challenges other than wages that could prevent workers from returning to the sector. Ross has identified two key factors:
1 The experienced hospitality workforce is not available
Approximately 6.2 million hospitality employees were laid off in the US during the 2020 shutdown. However, one-third of these jobs were recovered as states opened up, with staffing levels around 50 per cent at the beginning of 2021.
Any experienced staff moved on to new industries and are not expected to return. In addition, inexperienced workers find the employment options offered by hotels and resorts less appealing, despite more competitive wages, sign-on bonuses and incentives.
2 Ineffective hiring
Overwhelmed managers struggle to recruit, interview, hire and train new workers as many are stepping in for absent team members. Managers report spending almost 50 per cent of their time cleaning, working on reception, and performing maintenance in addition to their management duties. Something had to go – and that was effective recruitment.
What other steps can hospitality owners take to manage staff shortages?
Ross believes there are three areas hospitality should be focusing on now:
1 Investment in recruitment training for managers.
2 New marketing that promotes hospitality’s career potential and purpose to build interest and appeal outside the current employee base.
3 Learn from the past and be better prepared should this happen again in the future.
Hospitality should embrace predictive staffing models, address volatile demand patterns and set productivity standards.
Writing in Forbes, self-styled disruptor Chris Adams, CEO of Ellis Adams Group, goes further. He believes the industry needs to change how it operates and raise a new generation of professionals “with passion and heart for serving others”. This includes:
- Investing in its professionals;
- Setting a new standard for wages in every position;
- Eliminate the pressure on gratuities; and
- Cultivate passionate professionals.
With over 25 years of experience in the industry, consultant Frederic Gonzalo believes there are other ways to mitigate labor shortages, including:
Investing in AI and technology
Quoting Max Starkov in HospitalityNet, “investing in technology can solve the current labor shortages through innovations, automation, mobility, robotization and next-gen technology applications. The goal here is to do more with fewer employees by using technology and reduce your staffing needs by a significant percentage compared to 2019 levels.”
Technology can enhance the customer experience and reduce the dependency on staff through tools such as:
- Mobile-first website allowing for automated messages and personalized offers
- Virtual concierge on site
- Chatbot on property and website
- Mobile check-in or kiosk for self-check-in
- Mobile app to open room, make requests with housekeeping or room service
- Robots for room service
- Smart rooms
- Vending machines and self-service dining and drinking facilities
- Automated messaging before, during and after the stay
Increasing international visas
Gonzalo believes that if competing for employees locally is difficult, then solutions might lie abroad. For example, Cultural Exchange Visas allow international talents to gain experience in a country other than their home country.
Whatever decision your property takes to improve staff shortages, you must act promptly to gain the extra revenue and profit that is now so needed. And perhaps those with vision will use that win to entice their staff back with an increased salary as one of the incentives, thus making sure to get the hotel, resort or motel back on its feet.
Please tell us what you are doing! We’d love to hear how you are addressing the staff crisis in our industry. Just drop us an email at firstname.lastname@example.org or complete the contact form and we’ll add your experience and advice to our website.