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Lingering Hotel Staffing Shortages Keep Pushing Travel Costs Higher

Hotel owners have aggressively hired recently, but despite regaining many jobs, the industry remains understaffed and faces adaptation challenges.
February 29, 2024
Hotel owners have been on an epic hiring spree.
  • Hotel industry staffing shortages are squeezing the industry, with wages rising fast, pushing room rates to record highs.
  • Hotel owners fear customer backlash as staffing shortages compromise service while simultaneously increasing travel costs.
  • The hospitality industry may lean into technology to address staffing shortages, taking a page from the airline industry’s book.
Key Takeaways

Hotel owners still face staffing shortages despite being on an epic hiring spree for the past two years. The Wall Street Journal reports that wage increases to lure workers back are pushing daily room rates near all-time highs, as hotel owners fear a guest backlash could be brewing.

Skyrocketing wages: U.S. hotels will collectively pay $123 billion in compensation this year, a 20% increase since 2019, per the American Hotel & Lodging Association. Average hourly earnings of all accommodation workers have surged to record highs since falling in the early days of the pandemic.

  • The wage increases are pushing the cost of travel higher. Bob Habeeb, CEO of Maverick Hotels & Restaurants, expects to increase wages by 10% across his hotel portfolio this year.

Where are the workers? The hospitality industry is still below pre-pandemic staffing levels despite wage increases. According to government data, accommodation employment is down 9% since early 2020.

  • The lingering shortage is blamed on various factors. Workers are hesitating to return to the industry after 2020’s mass layoffs. Others have transitioned to different sectors with better pay. Immigration restrictions are also limiting the amount of seasonal workers.

More with less: Hotel operators are experimenting with ways to combat the staffing shortage. Some are leaning into food-delivery apps rather than in-house kitchen staff. Others have made housekeeping and check-in more efficient. Employees are also being asked to do more.

Why it matters: Ongoing staffing challenges are leading to historic career gains for hotel employees but significant challenges for the industry. Smaller staff may compromise the level of service as higher wages increase travel costs, which could alienate customers.

What’s next: Hotel staffing shortages are expected to linger despite gradual improvement since the pandemic. The result could be a further erosion of amenities and on-site services at U.S. hotels.

Hotels may turn to technology in response to labor shortages, which is more common at airports. Look for self-service, like virtual check-ins, to gain steam in the hospitality sector in the months ahead.

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