LOS ANGELES — Hotel industry leaders continue to grapple with the duality of labor: It's both improving and more difficult.
During a meeting of the Lodging Industry Investment Council, hotel executives spoke about how the labor environment is shifting and what challenges remain.
While he’s not close to the hotel operations side, Rob Leven, chief operating officer at Procaccianti Group and TPG Hotels and Resorts, said it seems there has been some relief, and hotels have been able to reduce the amount of contract labor they’ve had to use in recent years and hire more permanent staffing.
He said he’s cautiously optimistic that the industry won’t see a 40% increase in labor costs over the next several years as it has seen over the past three. Signs indicate that pressure should lessen.
“Labor’s been a challenge for as long as I’ve been in this industry, and it’ll continue to be a challenge finding quality people, keeping quality people,” Leven said. “All of that is always going to be our business.”
Some of that relief has come from changes in the number of job openings, Aperture Hotels CEO Charles Oswald said. A recent labor report said there was a spread of about 2.5 million open jobs versus the number of unemployed people at the end of 2023 compared to 6 million the year before.
“We’re in a different labor environment from that standpoint, through this process and some white-collar downsizing and things that have happened in the industry that have maybe alleviated some pressure toward our ability to go out and find hourly labor service, industry labor,” he said.
At the same time, Oswald said he doesn’t believe labor unions will let up. There’s been an overall increase in the number of union petitions.
“When 350 Starbucks stores organize, including Alpharetta, Georgia, that’s crazy,” he said. “No one would have ever seen something like that coming just a few years ago.”
This is an environment in which employees are trying to get paid more for doing less, he said. In markets such as Los Angeles, there’s talk about limiting the number of rooms or square footage housekeepers can clean. There’s talk of moving minimum wage up to $31 an hour.
“How do you make this business model work with those kind of numbers?” he asked. “Something else, something big has to change, or we just have to drive a lot more rate.”
A survey conducted by the American Hotel & Lodging Association that uses data from Hotel Effectiveness found the rate of hotel general manager turnover is 34%, Oswald said. That’s 1 in 3 general managers every day, and that’s 10% higher than the year before and 35% higher than in 2019.
The housekeeping turnover rate is 34% of room attendants within the first 30 days of employment, he said. That turnover pressure is still there, but it’s a little easier to replace them because of the narrowing gap between the unemployed and job openings.
While hiring overall has gotten easier, filling culinary positions has not improved, said Joseph Bojanowski, president and CEO of PM Hotel Group. There was a mass exodus, and though some employees have returned, that’s one area there doesn’t appear to be any improvements coming soon.
What likely is a longer-term problem is hiring middle managers and entry-level managers, he said.
“We’re not seeing a deep pool of those, and eventually that’s going to catch up with us,” Bojanowski said. “We’re not going to have a lot of up-and-coming GMs and director-level positions, so that’s a longer-term concern, but not today.”
There were 9 million people who have come to the United States over the past three years, but the current immigration system is preventing many of them from being able to work, Leven said.
“We just hope that we could do something productive to help that situation, but I’m not holding my breath,” he said.
There are more than 2 million people legally seeking asylum right who are not allowed to work as they go through a multi-year process in a dysfunctional system, Bojanowski said.
There's long been this perception that foreign workers are taking jobs from Americans, Leven said.
"They're really not, because we've got this huge gap of supply and demand of these jobs that we don't have Americans for," he said.
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