OperationsLabor Pains: Rising Wages, Difficulty Finding Employees Among Top Hotel Company Concerns

Labor Pains: Rising Wages, Difficulty Finding Employees Among Top Hotel Company Concerns

While hotel executives concede that the labor market has improved since bottoming out during the pandemic just a few years ago, they still acknowledge that several challenges exist, not the least of which is rising wages as well as difficulty finding and retaining employees.

Robert Habeeb, president/CEO, Maverick Hotels & Restaurants, confirmed that “labor has been the big story” during the post-COVID era and detailed how the market has evolved over the last few years.

“There was an acute labor shortage; you couldn’t find enough people just to open your business, and that has evolved now into a moderating of the worker shortage. But wage inflation has hurt our bottom lines, and it’s outpacing the inflation we’re seeing in the economy. Staffing is not easy, the supply of workers is somewhat limited, and you’re going to pay an awful lot more in wages in the coming years,” he said.

Dorothy Dowling, managing director, Horwath HTL, has also observed several changes. “We lost a lot of talent during COVID; I think that’s the biggest challenge. So, we’ve lost a lot of institutional knowledge, particularly in the above-property revenue management, sales, and marketing base. It’s hard to bring those people back because many of them have found better lifestyle options. So, I think we are on a path now where we’ve got to reposition the story around the career opportunities within the industry and really build the employer brand back and the hospitality brand back as a destination choice in terms of careers,” she noted.

Liz Uber, EVP and COO, Extended Stay America (ESA), offered her perspective.

“Certainly, as we’ve come out of COVID finding employees is definitely easier, but keeping them and showing them the pathway that hospitality provides is more challenging. One of the great things about our industry is you don’t need a Ph.D. or a master’s degree; you just need a willingness to work hard and take care of people. So, I think we need to continue to talk to individuals about some of the opportunities within hospitality,” she said.

Uber added, “At ESA, we have lots of associates that have been with us for a very long time and lots of great stories about people who started as housekeepers or front desk agents and are now general managers or district managers.”

But finding those entry-level workers has become increasingly challenging in recent years, according to Habeeb, who pointed out today’s workers have many options.

“It’s a horse race, the competition for labor is intense, but it’s not as bad as it was in the immediate post-pandemic era when you just couldn’t find anyone. Now you can find folks, but it’s very competitive and because the job market is so plentiful people are willing to make a job transition at the drop of a hat. They know that there’s no impediment to them replacing the job,” he said.

Sourcing and Attracting Candidates

While finding employees is challenging, leveraging tools such as social media can be a major help, according to Uber.

“It’s definitely changed the dynamic; we look for associates on social media. Your online presence, whether it’s LinkedIn or Instagram or whatever account you happen to follow, is key,” she noted.

Uber also noted that flexibility, when it comes to hours or pay, is another critical consideration for today’s workers and can definitely help move the needle for hotel companies looking to attract talent.

“We find that’s huge in our industry. We have had some great success with offering some of those flexible hours where we have a stay-at-home parent that’s really looking to work from 8 a.m. to 2 p.m. or 10 a.m. to 1 p.m., and we have a need for that,” she noted.

Uber further added that benefits such as weekly pay and maternity and paternity leave have also been difference makers for ESA.

“These are things that maybe five or 10 years ago weren’t probably super important to people. I think during COVID people realized how important family time and family life is and how they can make way for both,” she said.

Habeeb reinforced the point.

“I think the lesson in a very competitive wage environment is you have to lean into the things that people value. The pandemic leaves us with lingering values that have changed the way that we look at the workplace, and flexibility is a huge one, particularly the ability to work from home,” he said.

Habeeb further added that the company has modified its work-from-home platform, which was originally 100 percent remote and now includes specified team days where employees can interact. He did note, however, that while corporate employees have these benefits, hotels inherently must be more creative.

“At the property level, that creates a stress for us because we can’t offer work from home. So, we’re going to have to find a way to be competitive in other ways so that the employees’ wants and needs are being met, such as flexible scheduling and job teaming. There are a lot of things that we’re going to have to look at in the future that we didn’t in the past,” he said.

Demographic Considerations

While Dowling acknowledged that a “marketing mindset” is now essential in terms of how hoteliers approach the younger generation of workers, she also observed some other key demographic changes taking place.

“I would also challenge our industry that we’ve got to have a much broader understanding of that demography of the current population base because the plus 65, and actually plus 75, is the fastest-growing segment of the labor force. We have to be mindful about some of our biases potentially around older workers who can bring a lot of institutional knowledge. I think there’s a lot of wisdom that older workers can bring. We just have to really open up our minds to think differently about how we can embrace some of these new segments in the workplace in a different way,” she noted.

Expanding on the point, Habeeb concluded the industry in general must think differently about how it approaches the overall workforce.

“All of us that have been in this business for a period of time have dealt with the evolution of the American worker; that evolution is now a revolution. It’s not a gradual progression that will take generations to wake up; it’s a significant change in the mindset of the people of the workforce. We’ve got to throw out the rulebook and start over. We have to create a workplace that’s ready for the future and that accepts the changes in society and embraces them rather than resists them,” he noted.

Left to Right: Rajiv Trivedi, Julie Arrowsmith, Greg Juceam, Larry Cuculic
A Critical Talking Point: Brand Leaders Focus on Culture, Recruiting Efforts to Improve Industry’s Labor Efforts

Brand CEOs discussing the hospitality labor market recently highlighted the importance of the right culture, employee incentives, and increased recruiting efforts for hotel companies looking to gain an edge on the workforce front. The executives discussed some potential solutions and best practices during last month’s AAHOA conference, which included more than 5,000 attendees.

Geoff Ballotti, president/CEO, Wyndham Hotels & Resorts, touted the importance of actively recruiting younger workers.

“We all have to get out more, we all have to recruit more, and we all have to use our voices. We are losing talent to other industries, and that’s a huge issue for us as an industry. Applications at half of our hotel schools are down by 30 percent, 40 percent, and 50 percent. We all have a job to do to attract talent to this industry. We all need to use our voices, we need to spend more time on college campuses, and we all need to talk about it more,” he said.

John Murray, president/CEO, Sonesta International Hotels, agreed while advocating for “apprenticeship and internship programs” at high schools and colleges.

“You have to have good training; you have to show employees that they’re appreciated,” he commented, adding that the industry needs “to tell the story” on behalf of many longtime hotel executives who started in entry-level positions, such as a doorman
or housekeeper.

Rajiv Trivedi, member of board of directors, Red Roof, opted to focus on culture while noting that some progress has been made in the aftermath of COVID.

“The labor situation has improved from where it was three years ago. But people that are working at your property will stay for a while if they have found a culture where they feel appreciated and paid appropriately,” he said.

Trivedi further emphasized the value of open communication with employees and paving the way for them.

“It’s important to educate them that there is a path for a better tomorrow for each employee that is working with you. You need to truly mentor them and show them a path and a vision that they could do better than what they had done today. I keep bringing it back to culture—control what you can and that can make such a huge difference on labor,” he said.

Best Western President/CEO Larry Cuculic underscored the point.

“Every interaction with an employee has to mean something; you have to let them know that they’re a part of a team. It’s a tough industry with a lot of challenges. You have to love what you do and bring it every day, and that flows down to your team and that’s how you retain,” he said.

Finally, Greg Juceam, president/CEO, Extended Stay America, explained it’s all about “purpose” when it comes to taking care of associates and guests alike.

“It’s about hospitality. It’s not necessarily helping someone get an [extra] week’s vacation; it’s about taking care of them. All of us have extended-stay brands; in that segment, in particular, people are away from home for weeks and months on end. We have an opportunity to help them have better lives and take care of them when they’re in a vulnerable situation, and I think for us, in particular, it’s really helped with [employee] retention,” he said.