Hotel owners and operators are facing an increasing dilemma during the ongoing recovery. More Americans are vaccinated and traveling again, so demand for hotel rooms is increasing, but qualified staff needed to clean rooms, maintain the property, provide guest services and check people in and out is often hard to find.
In some leisure markets there are anecdotes about rooms going unsold, not because there is no demand but because there were not enough housekeepers available to clean all the rooms that were vacated.
When hotels closed in the spring of 2020 and had to furlough or lay off workers, the initial assumption was that the closures would not last long and that hotels would soon resume their normal operations and regain their staffing levels. That proved not to be the case, and many former hotel staffers found other employment over the past 14 months.
Room demand is indeed returning with U.S. hotel occupancy at 54.6% in March of this year, a sharp 15.6 point increase from March of 2020 according to STR, CoStar's hospitality analytics firm. Meanwhile, the Bureau of Labor Statistics in its latest release counts roughly 1.5 million workers in the accommodations sector. But that number is a far cry from the 2.1 million workers that were recorded in early 2020.
It is true that some hotels are still closed, especially at the higher end of the luxury scale and in urban locations, but the total number of temporarily closed hotels as of early May was only 485 properties or roughly 2.2% of room supply. In other words, the hotel industry is mostly open for business. Add to that the number of hotels that are opening for the first time and the outcome is that demand for experienced hotel workers is ramping up.
STR data shows that, especially on weekends, eager, vaccinated travelers are hitting the road to finally buy what they could not get in 2020: travel experiences. These higher demand levels, in turn, necessitate more staff.
While the hotel industry laid off workers, other services, such as Amazon and food delivery companies, continued to hire and eagerly offered former housekeepers and front desk clerks new jobs. Now that the hotel operators are ready to rehire their staff, they may come up empty-handed. The result of this labor shortage is higher wages.
The BLS data is clear. The number of staff currently working in the industry is still much smaller than it used to be. And to get those former workers back into the industry, higher wages are required, not just to compete with companies outside of the industry but also to compete with other hotels.
The coming quarters will likely see continued wage increases as the industry ramps up to support higher demand levels. For hotel operators, the question may not be "If you open, will they come?” but rather “If you sell the room, can you clean it?”