How tough is the hotel labor market for employers, exactly?

Moderator Chip Rogers, CEO of the American Hotel & Lodging Association, leads a panel discussion at ALIS 2021 with, from left, Radisson Hotel Group CEO Jim Alderman and Remington Hotels CEO Sloan Dean.
Moderator Chip Rogers, CEO of the American Hotel & Lodging Association, leads a panel discussion at ALIS 2021 with, from left, Radisson Hotel Group CEO Jim Alderman and Remington Hotels CEO Sloan Dean. Photo Credit: Tovin Lapan

LOS ANGELES -- Labor emerged as a hot topic at the 20th installment of the American Lodging Investment Summit, with several panel discussions and presentations touching on everything from hiring and retention to wages and training.

The hotel industry experienced unprecedented layoffs and furloughs in 2020 as properties scrambled to stay afloat amid the Covid-19 pandemic. Hotel employment was down 25% by the end of 2020. 

Now, the industry is struggling to staff back up and retain existing workers as demand is returning. A recent report from the American Hotel and Lodging Association predicts that the industry won't bounce back to 2019 employment levels until at least 2023. 

"Labor may very well be the most significant challenge we all face," Marriott CEO Anthony Capuano said. "We've got to invest in our people. We've got to remind them that travel and tourism is a remarkable place to build a long-term career."

Several factors were offered for contributing to the challenging situation. First, with hospitality one of the hardest hit industries, workers fled to other professions and are continuing to move out of the field. 

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"None of our properties have been able to retain employees," IBF Hospitality CEO Ray Bhai said. "The retention rate is probably 35 to 40%." 

G6 Hospitality CEO Rob Palleschi said he conducted an informal survey of hotel staff he encountered while in Los Angeles. 

"Consistently, they are thrilled to be back, they are thrilled to be working," he said. "They're just worried that their hours will be cut again, and they can't depend on us. We need to speak with one voice across the industry, that we are a great place to work, we offer more than a fare wage, and that we provide long-term careers."

Other executives pointed out the high rate of burnout among managers and other employees who were retained during the pandemic but compelled to do multiple tasks and work long hours. 

InterMountain Management owner Dewey Weaver lamented having lost six managers who quit to enter different industries in the last month. 

"That's weighing on my mind in terms of what we do to help these folks," he said. "They're not only managing the hotel. They're working the front desk, they're cleaning rooms. I had some who worked the front desk, and then at midnight come back and clean the rooms. And they have families. I mean how long can you do that? A year of that wears on you."

Weaver and other executives also said they have had to adjust wages to compete with a variety of employers, many of them outside the hotel business, and also lower some of the barriers to entry. 

"We're competing with McDonald's and Amazon is paying $18 and hour," Weaver said.  "...What we've had to do is eliminate drug testing, and we used to do things in terms of appearance with earrings and stuff like that. That's all gone by the wayside."

Remington Hotels CEO Sloan Dean said he's seen hourly wages rise roughly 15% and expects them to stay at 8% to 12% above pre-pandemic levels moving forward. 

"We are going to have to do more with less for a while," he said, adding that they are trying to go with 80% to 90% of their previous workforce while having them work across departments and also incorporating more technology to streamline operations. 

Other solutions offered during the discussions included more incentives, training initiatives, and promoting career opportunities in hospitality. 

Several of the executives said they are offering retention bonuses, and even upfront hiring bonuses. Others are working to augment and better publicize their training and development programs.

"It's incredibly tough, and it's actually affecting franchise sales at this point because we have owners we can't get in touch with because they're cleaning rooms. They're just too busy," said Radisson Hotel Group CEO Jim Alderman. "It's true, 25% to 30% of the workforce ... has decided to leave this industry. We are doing a very poor job of promoting the great aspects of this industry. It's truly one of the only places where you can start off a non-English speaking housekeeper and make it to general manager."

Several of the speakers expressed optimism that as vaccine rates rise and the post-pandemic reopening continues, there will be some stabilization in the labor market, but it will take time.

"I think it will normalize," Palleschi said. "Short term we'll have less labor and we're all going to pay more. I think it's incumbent on our operators to manage it, be as flexible as possible, be as creative as possible. Create a really good experience for those team members and retain them."


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