US Hoteliers Gradually Make Headway Against Labor Shortage – CoStar Group

By Danny King
HNN contributor

The pain of labor shortages is starting to ease somewhat from the summer months, but hoteliers still face staffing shortfalls, concentrated largely in the housekeeping and culinary departments.
Hoteliers are benefiting from a loosening labor market as perks such as higher salaries, retention bonuses, finder’s fees for new workers, more flexible work schedules, and same-day payments appear to be drawing workers back into the hospitality industry.
Davidson Hospitality Group, which manages 80 hotels and approximately 12,000 workers, is staffed at about 10% less than its “ideal” level, compared to about 15% below its optimal staffing level during the second quarter of the year, according to Pete Sams, chief operating officer at Atlanta-based Davidson Hospitality Group. About 16% of the company’s job openings are in culinary, while 15% are in housekeeping.
Los Angeles-based luxury-boutique hotelier Palisociety, has approximately 700 employees across its 16 hotels and seeks to add about 50 more, President Jorgan von Stiening said. The company is receiving about 10 times the monthly applications for open positions that it did during the summer.
“Right now, jobs in hospitality are a dime a dozen. If you don’t like your job, you can quit and get another job the next day. But a couple months ago, we saw things starting to get better,” von Stiening said. “Not to the levels as before the pandemic, but it loosened up.”
The U.S. unemployment rate of the accommodations sector increased to 6.7% in September from a recent low of 4.4% in July, according to the U.S. Bureau of Labor. By comparison, the U.S. non-farm unemployment rate was 3.5% in September.
Staffing remains a substantial issue for hoteliers. Of the hoteliers who responded to a September survey conducted by the trade group American Hotel & Lodging Association, 87% said they were short-staffed, while 36% said they were “severely” short-staffed, with housekeeping as the most prominent staffing shortage. Still, those numbers were down from 97% and 49% in May, respectively.
“There’s still a certain shortfall of labor available, but it’s getting better with each passing month,” Sams said. “We have continued to make progress.”
Hoteliers have had to grapple with staffing since the pandemic brought travel to a near-halt in spring 2020 shortly after the industry had experienced historic highs in room demand. Faced with closed or near-empty hotels, hoteliers laid off works en masse, causing the unemployment rate among U.S. hospitality workers to spike to almost 50% in 2020.
At many hotels, bringing workers back has proved to be more challenging than bringing business back, as rising housing costs in tourist-heavy areas made it more difficult for hoteliers to attract lower-wage workers. By July, U.S. room demand had returned to, and in some cases exceeded, pre-pandemic levels, with occupancy reaching 70% and revenue per available room at $111, according to CoStar's hospitality analytics firm STR. That month, U.S. hospitality unemployment had dropped to 4.4% from 15% a year earlier.
“Obviously, staffing is challenging,” said Bob Van Den Oord, regional vice president of operations for Langham Hospitality Group’s North American, Europe and Middle East regions. “We’re all fishing out of the same pond, so it’s not easy. The key is to really take care of the staff.”
By September, U.S. room demand declined slightly from summer highs, with U.S. occupancy at 67% while RevPAR was $103, which was still 16% higher than three years prior, according to STR.
Meanwhile, hoteliers resorted to a wide array of methods to attract, keep and deploy workers. Sausalito, California-based Passport Resorts, which operates the Cavallo Point Lodge just north of San Francisco, has used a combination of contract workers and finders’ fees to build back up the labor force at the 142-room property, where staffing was reduced by as much as 70% shortly after the pandemic hit in spring 2020. Staffing is currently about 20% less than its pre-pandemic level of 340, according to Stephen Andrews, vice president of marketing and sales at Passport Resorts, which also runs Big Sur’s Post Ranch Inn.
“We have had to supplement vacant staff positions using contract workers. We have always offered incentives to our own employees who introduce new team members,” Andrews said. “With some exceptions, guests are requesting, and receiving, all pre-COVID levels of service. The open campus nature and Golden Gate National Park setting has been a boon to individual travelers, family travelers and business travelers.”
Overall, hospitality-industry wages continue to rise. U.S. average hourly earnings for the accommodations sector rose to $19.32 an hour for August — the most recent month tracked — from $15.09 an hour over the same period in 2019.
Palisociety’s von Stiening said in addition to increasing wages in some positions by as much as 25% from pre-pandemic levels, the company was able to reduce its employees’ out-of-pocket health-insurance costs by about 75% while adding paid vacation time for first-year workers.
Davidson Hospitality addressed some of its labor shortages by moving workers between seasonal resorts. For instance, last winter when the Grand Hotel on Michigan’s Mackinac Island closed for the year in October, some workers were temporarily moved to the company's Colorado resorts, Sams said.
The company also lessened its daily housekeeping load by giving its guests an “opt-in” option for nightly housekeeping instead of an “opt-out” option, which reduced the percentage of guests requesting stayover-cleaning service to about 40% from about 90% before the pandemic, said Sams, who added that Davidson Hospitality in September still managed to top J.D. Power’s annual guest-satisfaction survey of third-party hotel management firms.
Additionally, in regions where “gig economy” jobs with companies such as Uber and Lyft were especially prevalent, Davidson Hospitality countered by offering same-day payments to some workers.
“It’s extremely cost-ineffective but, as a last resort, necessary in some areas,” Sams said.
The AH&LA forecast in its “Midyear State of the Hotel Industry” report that the number of U.S. hotel employees would increase 20% this year to 1.97 million, but that's still 16% lower than workforce of 2019.
Perks aside, both Sams and von Stiening pointed out that less tangible factors such as management quality, company culture and guest interaction will continue to be important factors in separating the hospitality companies that can fill open positions from those that will remain substantially short-staffed.
“We’re in a really good spot as far as leadership positions,” Sams said. “It really comes down to being the best place to work in any street corner.”
Von Stiening added that the reason why workers are attracted to the hospitality industry “is because we’re independent.”
“You can really own the space and know the guests,” he said. “We really dig into that environment and culture of being a neighborhood innkeeper. That general tone keeps people engaged.”
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