Yes, higher wages are essential to competing for workers, but innovations in tech and corporate culture could be mind-changers for job seekers.
Despite the International Labour Organization’s prediction of a global slowdown in jobs growth from 2022’s 2% to 1% this year, finding enough workers to deliver hotel services remains a major issue for the hospitality industry.
In his remarks at the Americas Lodging Investment Summit (ALIS) held January 23 – 25 in Los Angeles, American Hotel & Lodging Association CEO Chip Rogers confirmed the business reality on the minds of the more than 2,600 attendees. “The hotel industry has been more impacted by a lack of workers than any other industry,” he said.
“Wages may be the number draw for workers, but flexibility is usually number two.”
Mark Tamis
It’s an issue that permeates pretty much every aspect of the hotel business. It came as no surprise when he noted that a recent AHLA members’ survey revealed that 85% responded their properties were somewhat or severely understaffed.
Large-scale measures such as the Department of Homeland Security’s move to nearly double the number of H-2B visas in 2023 (this program enables employers in nonagricultural industries to hire noncitizens to provide labor and services on a temporary basis in the U.S.) will clearly help, Rogers said, as will continued lobbying efforts and immigration reform.
However, change is also ramping up at the grass roots level. Industry insiders are exploring a range of new strategies to attract and retain a stable workforce—without eroding the bottom line.
Offer better wages, better work-style
“We really have to make a concerted push to get workers back,” said Mark Tamis, president, global operations, Aimbridge Hospitality. “So many fled this [the hospitality] industry during the pandemic. As an industry, we’re going to have raise wages and make jobs more attractive from a career perspective to get back the people who left two or three years ago.”
While that larger initiative is underway, job one today is minimizing the cost of contract labor. “Contract labor has had one of the biggest bottom-line impacts since the outbreak of the pandemic,” Tamis added. “When we look at where that labor force is coming from and where the efficiencies are, that helps control labor costs on the top and bottom lines.”
Tamis pointed out that while workers will likely stay away until wages are more competitive, there are other tools in the kit to make entrée into or a return to hospitality more appealing. Flexibility in scheduling is at or near the top of that list. “Wages may be the number one draw for workers, but flexibility is usually number two,” he said.
Aimbridge is embracing a new kind of gig economy that gives workers choices in both where they work and when. “Because of our scale, we have over 50 hotels in many metropolitan areas. It used to be that each of those properties had a hand-written work schedule for employees tacked up somewhere. Workers clocked in, did their shift, and went home. Technology has put flexibility in the hands of team members and their managers,” Tamis said.
Now that information is online, Tamis added, and staff can see the work schedule for all Aimbridge our hotels in their area. “If they have to swap shifts, take extra shifts or work a Friday instead of Monday, they can see if there are options to make that happen,” he said. “This makes it easier for managers as well since it removes the guesswork and helps minimize calling in contract workers at the last minute. They can check availability within the Aimbridge team to cover those emergencies.”
The impact of these layered efforts is paying off “significantly,” according to Tamis. “Depending on the property and its location, minimizing the need for contract labor to strategic or forecasted demand and controlling hiring and turnover can result in labor-related cost savings in double digits over a year.”
Timing is key
“We have to be able to be competitive on pay not just within our industry but also with retail, fast food and so on,” said Patrick Short, president, Peachtree Hotel Group. “When they start posting $16-$18 an hour, we have to compete and that's a major raw dollar change. We've been able to offset some of that with revenue growth, but we'll need to be able to keep growing rates and revenues to make the margins work. Also, I think the Great Resignation and other factors will mean that labor costs won't continue to grow as they have over the last couple years.”
Short's coping strategy? Making sure he hires at the right time, especially for new hotels. “We're bringing on staff later in the preopening process, which helps minimize the budgetary damage of any construction delays,” Short added. “Bear in mind, too, that it's not just your hotel that may be understaffed - we see cities that used to have three inspectors but now have only one. Don't bring on staff until you're sure you need them and make sure you have contingencies in your budget for delays beyond your control.”
Focus on giving employees a “why”
Employees, like guests, look at value, not just numbers. Just as guests might spend up for a better location or excellent customer service, potential team members will prioritize companies they actively want to be a part of, said Ken Cruse, cofounder and CEO of Soul Community Planet and Alpha Wave Investors.
“People want to work in jobs that are aligned with their core values. We talk about that Gen Z wanting to go save the world, but the truth is that it's not a specific demographic - we said the same things about Millennials 10-15 years ago. Alignment of values is a good tool for getting the 'right' people on board,” he added.
Cruse uses the same approach to helping extend his marketing reach via his guests. “We say our product is 'guest advocates.' If somebody has a great stay and tells five friends, it creates a virtuous cycle that not only supplements our marketing but lowers customer acquisition costs and drives direct booking.”