For an industry that has borne the brunt of the economic impact from the COVID crisis, the hotel business should view recent pandemic developments as extremely favorable news. New cases are dropping across the U.S., and hospitalization and mortality rates are plummeting as an ahead-of-schedule vaccine rollout continues to make the prospect of a widespread return to pre-pandemic norms seem closer than ever.

The straightforwardly-named Back-to-Normal Index—a proprietary tool created by Moody’s Analytics and CNN Business that measures 37 national and seven state-level indicators to compare current economic activity to pre-pandemic levels from March of 2020—is currently reporting that the U.S. is already back up to 89% of our pre-pandemic economy. Given what the nation has been through in the last 12+ months, that’s incredible news.

And with temperatures warming, COVID restrictions loosening, and pent-up demand for travel promising to make the next several months a boom time for many properties, hotel owners and operators should be celebrating.

There’s a fly in the ointment, however: labor. Or, more precisely, a lack of it. The labor shortage in the hotel business is a significant problem. Even with demand rising, the entire hospitality industry is struggling to secure talent, especially for essential service positions. In early April, Truist noted leisure and hospitality payrolls were 14.6% lower than pre-pandemic levels. Even with noteworthy gains in recent months, the leisure and hospitality sector is still down a whopping 2.85 million jobs compared to February 2020. Complicating the challenge is the fact that there is no single reason for the shortage. Many hoteliers were forced to implement furloughs and layoffs last year, and a sizable percentage of those employees have since left the industry. Lingering COVID concerns are certainly making some workers hesitant to return, and unemployment and stimulus checks help make that decision a little easier. For parents of children not yet back in school full time, the need to secure childcare is another issue.

With a long list of complex causes, there is no magic bullet solution. Hotel owners and operators are looking to be more creative in their approach to hiring, offering new incentives, special perks, and financial rewards—from referral fees to signing bonuses. There is a practical limit, however, to how much money can be thrown at the problem. Rising labor costs were already an issue before the COVID crisis, and labor costs as a percentage of revenue went up more than 50% between April of last year and March 2021. Every hotelier is faced with a challenging calculus: balancing the dauntingly steep cost of labor against the potential loss of revenue from lost business created by staffing shortages. We can’t sell rooms we don’t have the labor to clean. Higher wages could also offset/outweigh the operating efficiency gains that many hotels have been able to make over the course of the last year.

The best operators have achieved those gains in part by cross-training employees and adopting an “all hands on deck” mentality over the last year. It wasn’t unheard of for general managers to pitch in and help clean rooms, or for marketing team members to help out at the front desk. To some extent, a hiring approach that prioritizes “utility players” and offers a similar degree of versatility could continue to be valuable today. But there are real concerns about burnout, especially as volumes begin to pick up in the weeks and months ahead.

Above all, hotel owners and operators will need to do an outstanding job of offering a compelling case for talent. Part of that value proposition might involve perks and wage increases, but it will almost certainly need to go deeper. Filling the talent gap means helping prospective employees discover (or rediscover) their love of hospitality—and the appeal of a fast-paced industry that offers remarkable opportunities for advancement. In a business where most general managers got their start at the front desk, merit-based upward mobility paints a compelling picture of opportunity. Schedule flexibility and the potential for strong professional growth affords a high quality of life, all of which resonates especially strongly with Millennials and Gen Z workers. It’s important to point out that it can’t just be messaging and marketing around those ideas. Hotels need to back them up with meaningful commitment.

The good news is that most successful hotel management professionals have traditionally been those who already do just that. Leading hoteliers have long recognized that a strong and connected professional culture goes a very long way in creating the kind of optimism, energy, and team-focused positivity that not only attracts talent, but retains it. Operators with an established reputation for cultivating that atmosphere, valuing their employees, and creating connected and committed teams and supportive working environments are likely to find themselves in a good place relative to the competition. As they tell that story to prospective employees, and back that up with real opportunity and consistent positivity, the talent gap will grow smaller—and the prospects for sustained hospitality success in a post-COVID economy will grow dramatically brighter.

Steve Van is president & CEO of Prism Hotels & Resorts.

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