To overcome pressing labor challenges, some hospitality industry leaders are urging hotel owners to take action with local governments and work with brands to improve the business model.

DJ Rama, president and CEO of South Carolina-based Auro Hotels, said during the "Main Street Talks" panel at the Hunter Hotel Investment Conference that he advocates with politicians on the issues that are important to his company and the hotel industry.

"I never thought our tax dollar would be competing against our own dollar," he said. "In South Carolina, we are stopping the extension of the unemployment benefits June 30. We don't have a choice [but] to take action with our governors and let them know what's happening."

Retaining and hiring housekeepers alone has become a desperate challenge, he said, noting that Auro hotels recently began offering a $600 sign-on bonus for housekeepers.

"That's how challenging it is," he said.

Rama said the hospitality industry lost 3.2 million jobs at the onset of the pandemic, and industry trade associations such as the American Hotel and Lodging Association and Asian American Hotel Owners Association must come together to showcase the industry as an employer.

Brand partners must also work with franchisees to "break all the rules," he said.

"If we keep doing what we used to do, we're not going to find solutions," he said.

Corry Oakes, CEO and founder of South Carolina-based OTO Development, said the brands are improving on some things but ultimately must rethink the business model.

Rama said his company was forced to cap occupancy at 60% at some properties because staff simply could not clean all the rooms.

David Marvin, founder and president of Georgia-based hospitality investment, development and management company Legacy Ventures, said occupancy at its downtown hotels has improved from a 20% to 30% range to mid-40% to 60%.

Most of that demand is on weekends.

"What we're doing is we're selling weekend rooms and catching up with housekeeping during the week. At the end of the day, we've restricted inventory because of housekeeping issues," he said.

Mitch Patel, president and CEO of Tennessee-based Vision Hospitality Group, said the reality is some rooms need to be taken offline.

"How much more can we ask of our employees? We had to make this decision to furlough our associates to survive," he said. "Now that demand is coming back ... we just can't get people."

Patel said complications with the business model have not changed and remained a hurdle over the past two years.

"Our business model, structurally, we had some problems. Our [revenue per available room was going up] every year from '10, '11, onward all the way to '19 [but] our margins were diminishing," he said.

One change Oakes and Patel support is the option to charge guests for housekeeping.

Oakes said brands have allowed guests to opt-in to housekeeping but the airlines don't let passengers opt-in to have their luggage handled; they're charged.

Ultimately the customer wants the choice to maximize their value, he said. For one guest, more service might mean more value, but for others, there's more value in less service.

"It's an innovative idea," Patel said. "I hope that there will be a permanent opt-in model for housekeeping services going forward."

General managers are still cleaning rooms, directors of sales and marketing are still working front desks, and he believes that model is unsustainable.

Vision's leadership team is having conversations with other companies as well as the brands to improve efficiency of the model, he said.

In March 2020, Vision was forced to furlough thousands of associates. Patel said he would rather have a labor problem than a demand problem, but the enhanced unemployment benefits are posing a massive challenge.

Pre-pandemic, 2 million workers were on unemployment insurance. Now, it's at 16 million, he said, and 40% of those workers are making more on unemployment than when they were working.

"That has to change," he said, noting the Montana state government is giving people a $1,200 incentive to return to work.

Rama said he's gone through many economic cycles but has never gone through an 18-month cycle like the current one. Overcoming the challenges will require taking each one day at a time and being resilient, he said.

"Any decisions we all make, let's make sure there's an open door ... the message is: be flexible," Rama said. "All of you have made the right decisions. I think the worst is behind us, but let's also be careful and make the right decisions for your own organizations and your own people."